Tradestreaming Cascade: Top links from the week ending 4/24/2011

A new addition to Tradestreaming, the Tradestreaming Cascade is a highlight reel of some of the past week’s most interesting information. Much of this comes from my Twitter feed, @newrulesinvest.

The Wizard of Lies: Bernie Madoff and the Death of Trust just came out. Looking forward to reading it.

Comparison of 4 commission free ETF portfolios for less than 20 bps (World Beta)

Introducing the most powerful (premium) stock charts (Ycharts)

PIMCO files for ETF version of Bill Gross’ Total Return Fund (SEC)

Ameriprise gets into the ETF game by buying Grail (ETFdb)

Geezeo launches referral engine to help financial institutions cross-sell (Finextra)

Who is the top stock picker of the decade? (InvestmentNews)

Up-beat note for company-sponsored equity research (Integrity Research)

Best finance and investing podcasts

I’m continuing to time shift my consumption of audio: instead of listening to the radio in the car/work, I download a week’s worth of investing/finance/business podcasts on Sunday for my listening and learning.  I load up iTunes or other podcast apps I use, and have a listening library of great financial content for the whole week.

Here are a few of the best investing podcasts that I find I continue to download and listen to:

Personal Finance (tips on spending, managing money, saving)

Open Account (SuChin Pak): Umpqua Bank’s podcast is brought to life by SuChin Pak, an engaging thoughtful host. Listeners step inside Pak’s own relationship with money as she interviews people thrilled, confused, and stressed out about money.

Money, Markets, and More (Marketwatch): MM&M looks at the intersection of money, investing, and consumer behavior.  What are people doing with their money? Lively consumer tips and personal finance insights from MarketWatch reporters. This podcast took a hiatus earlier in the year and is now back in full-force. Part behavioral finance, part Smart Money.

Money for the Rest of Us (J. David Stein): David Stein is the former Chief Investment Strategist and Chief Portfolio Strategist at Fund Evaluation Group, LLC. Through stories, analogies and easy to understand examples, David gives individuals the tools and confidence they need to navigate an increasingly complex and unpredictable investing landscape.

Radical Personal Finance (Joshua Sheats): Joshua’s podcast is an enjoyable and educational romp through investing and personal finance. I love how much David shares about his own process — very easy to relate to and the topics he covers reflect that.

Investing

Value Investing (John Mihaljevic): If you enjoy value investing, this is a wonderful podcast by a wonderful host. You may know Mihaljevic from the great work he does on his blog, The Manual of Ideas. His value investing podcast fits in perfectly with interviews from great investors like Howard Marks, Mohnish Pabrai, James Montier, and a whole lot more.

The Meb Faber Show (Meb Faber): Bestselling author and investment fund manager, Meb Faber has some of the investment world’s top professionals join him on his podcast as he explores real market wisdom from some of the smartest minds in investing. Good balance between high level thinking and actionable, practical advice with an emphasis on smart beta, trend following, and value investing.

Taking Stock (Bloomberg’s Pimm Fox): Long time markets pundit, Pimm Fox does a good job analyzing breaking news, market movements and interviewing some of the smartest people in the asset management industry.

Investing Insights (Morningstar): Investment industry authority Morningstar’s podcast gives stock/fund/ETF picks and also bubbles up tips, analyzes breaking news, and interviews industry heavies. (VIDEO)

Wealthtrack (Consuleo Mack): Consuelo has one of the best program’s around, regularly interviewing top asset managers and thought leaders in the investment field.  (also available in video)

Sound Investing (Paul Merriman): Named “Best Money Podcast” by Money Magazine in 2008, Sound Investing is hosted by best-selling author Paul Merriman.  Good interviews with advisors, market analysis and debunkery.

Trading

The Trend Following Manifesto with Michael Covel (Michael Covel): The author of Trend Following is on a tear with great content, great interviews of some of investing’s greatest minds/investors.

General Interest (Markets, Money, Investing, Business)

Planet Money (NPR): The Planet Money podcast has really come into its own in the past couple of years. Great look at global economics, investing, and the people and institutions that are the cast and characters of the whole system.

McKinsey on Finance (McKinsey): More academic in nature, global consultancy McKinsey describes its cutting-edge research on finance, investing, economics and corporate finance.

Marketplace Money (American Public Radio): Billed as “the money show for the rest of us”, this weekly program is entertaining even for investment professionals.  Looks at local/international stories and helps make sense of those events.

J.P. Morgan Insights (J.P. Morgan): Leverages the investment banks research to help make sense of markets, industries, and investing trends.

Options Action (CNBC): I’m not an options guy but I find this program enjoyable for the ideas, explanations, and applications of option theory. (Video)

Technical Analysis Podcast (Dorsey Wright): Dorsey, Wright is one of the most respected technical analysis shops and this podcast explores their research, markets, industries and asset classes.

This Week in Barron’s (Barron’s): Highlights top articles in the current edition of Barron’s magazine

Don’t forget to subscribe and listen to Tradestreaming’s own podcast, Tradestreaming Radio.

Have your own suggestions — what investment/finance/business themed podcasts do you enjoy listening to?

ETFs, overindexing and the power of financial brands

Just doing some thinking about the growth and future of the ETF industry:

In my eyes, ETFs began as a second-generation of mutual funds with the following characteristics:

  • Passively managed: ETFs were passively managed (though that’s changing), building upon Jack Bogle’s success at Vanguard.  Most research at the time clung to the Efficient Market Hypothesis and academics declared that trying to beat the markets was a fool’s game.  ETFs were this vehicle.
  • Cheap: They were cheap.  If theory shows that you can’t pick stocks and win the game that way, better to index and reduce fees for better long term success.  ETFs’ passive structure enabled fund sponsors to get big and compete on price, driving prices further downward.
  • New access: Beyond their philosophical underpinnings and reduction in asset management fees, ETFs also opened doors to new asset classes (commodities), markets (Peru), and strategies (leveraged short funds) that weren’t easily accessible or understandable for retail investors previously.

Things are a’changin

Things are changing.  With Blackrock’s purchase of Barclays Global Investors iShares (BGI), ETFs are no longer seen as a pure threat to the much larger mutual fund industry.  Diversified asset managers like Blackrock and PIMCO, mutual fund firms like Vanguard and Fidelity, and online brokers like Schwab are building and buying ETFs as part of a larger smorgasboard of choices for their clients.  ETFs fit in like precious metal and international funds into a firm’s offerings.

In a sense, ETFs have now become purely productized, competing against similar strategies in different structures.  Contributing to this trend is the fact that numerous ETF offerings targeting the same strategy/geography have all hit the market. With multiple offerings for almost every market and strategy in ETF land, overindexing has blurred any and all distinctions in investors’ minds about which securities to select.  Instead of doing the work to pick the most appropriate security, brand will ultimately trump other things.

While there may be 3 general, broad ETFs for investors to get Chinese market exposure, most retail investors have no idea that they’ve been structured differently, that the compositions of the indices these ETFs track are wildly different and have led and may very well lead to different performance outcomes.

Brands, brands, brands

What this means, then, is (like most things in life), competition in the ETF space gets muddled.  ETFs compete against mutual funds every bit as much as they do against each other and with this backdrop, the emergence of the firm’s brand will trump performance and index structure.  Index composition or the race to build a better mousetrap becomes less important.  Branding will sway investor decisions and assets away from the smaller, more innovative players, towards the larger, stronger brands.

Like everything commercial, brands wield power.  So true in the financial sector as well.

You too can be the fund manager of the decade (kinda)

Morningstar announced yesterday its nominees for a new award Morningstar Fund Manager of the Decade.

According to Morningstar:

The Manager of the Decade award is not just about returns. We consider the risks assumed to achieve those results and take into account the strength of the manager, strategy, and firm’s stewardship. We also think it’s a greater feat to make a lot of money for a lot of people than to earn sky-high returns on a tiny pool of assets, so asset size factors in.

Morningstar created 3 strategies for the award:

  1. Domestic
  2. Foreign
  3. Fixed Income

The usual cast of characters made finalists.  So, you’ll see names like Fairholme’s Bruce Berkowitz, Don Yacktman, Fidelity’s Low Priced Stock Manager Joel Tillinghast, and PIMCO’s Bill Gross.

This is a great list and in spite of the terrible decade we’ve experienced as investors, there are some pretty impressive numbers from 1/2000 until now.  Many of the funds still put up double digit average annual returns.

Investors can use this list and bet that previous performance turns into future performance.  Or, they do it themselves and mimic the every move of these star asset managers.  Investors can tap the SEC’s IDEA database to read monthly regulatory filings of these investment advisors.  Through these disclosures, investors can piggyback the investment returns of the Morningstar finalists.

More enterprising investors may want to head over to Alpha Clone, a site developed to make piggybacking a whole lot easier.  For more on AC, check out my piece, Alpha Clone: The Cure to Investor Insanity.  AC users can not only track changes in thousands of professionally managed portfolios but they can backtest results of how best to mimic these investors.

[HT: The Reformed Broker]