A lot of investors claim they’re focused on the big picture.
Others give lip service to their focus on “the long term”.
James Juliano, partner and portfolio manager at Kairos Capital Advisors, walks the walk. He and founder of the firm, Russell Redenbaugh, use economic and government policy as a guide for their investment decisions.
James joins us on Tradestreaming Radio to talk about how he deciphers the policy tea leaves and how those big ideas get implemented tactically int their portfolio.
Listen to the FULL episode
Continue reading “Winning strategies: Investing using policy as a guide – with James Juliano”
Kudos to Tadas (like how that sounds) at Abnormal Returns for his recent blogging and book about what’s know as the low volatility anomaly.
Simply, accepted theory is that higher volatility stocks (ie riskier) should perform better than lower volatility ones over time. You know, the old risk-return tradeoff.
The thing is that in practice, they don’t.
There’s been a growing body of research and interest into this phenomenon and I thought it would be worthwhile to make some order out of this.
The investor’s guide to the low volatility anomaly
Much of the interest into this curious fact has stemmed from academic research.
Academic Research on the low volatility anomaly
Reporting on the low risk volatility anomaly
Morningstar: When less risk equals more reward
Low volatility investment products
- Russell Developed ex US Low Volatility ETF ($XLVO)
- iShares MSCI USA Minimum Volatility ETF ($USMV)
- PowerShares S&P Low Volatility Portfolio ($SPLV)
- Russell 1000 Low Volatility ($LVOL)
- Russell 2000 Low Volatility ($SLVY)
- iShares MSCI All Country World Minimum Volatility Index ($ACWV)
- Summit Global Investments Low Volatility Equity Fund ($SILVX)
What did I miss?
Subscribers (free) to my newsletter received the following this week. It’s my best-shot at providing an overview on
- important research and new investment strategies
- new technologies, apps, and platforms for investors
- insights into the behavior of investors
- changes in the investment business
How fund firms are luring advisors to use their products (Financial Planning)
Posted: May 17, 2012
This article describes the tactics fund firms are using (“value-added programs”) to encourage the usage and sale of their products for/to clients.
Vanguard lapping index fund competition (InvestmentNews)
Posted: May 15, 2012
Vanguard has seen over $65 billion in inflows, 4X the money its largest competitor (PIMCO) has seen.
AlphaClone signs partnership to license hedge fund replication index (AlphaClone)
Posted: May 15, 2012
AlphaClone, a platform that empowers creative hedge fund replication strategies, has taken a step that puts it one step closer to launching a fund based on its data.
Navigating the ETF Galaxy (Systematic Relative Strength)
Posted: May 15, 2012
This article by the folks at Dorsey Wright examines the state-of-the-art in ETF land and where the market is pointing for future growth.
Continue reading “Investing on the edge: Weekly update on tech, social media and investing (May 22, 2012)”
To build and protect wealth, Investors don’t need another get-rich-quick scheme.
Instead, look at history’s best investors to understand the basics of investing, the players in the market and their different priorities, what works and what doesn’t, and how to manage volatility.
Steven Sears, editor and columnist at Barron’s, has written just such a book. His writing has a lifetime of experience and advice witnessing what works for the best investors…and what doesn’t.
He joins us on Tradestreaming Radio to discuss his new book, The Indomitable Investor.
Listen to the FULL episode
Continue reading “Become an indomitable investor — with Steven Sears”
I’ve been chatting with a few friends over the past couple of days about which model will prevail for wealth management in years to come.
2 sides to the argument
Essentially, there are 2 sides to the argument:
- virtualists: The virutalists are banking on a future where investment advisors will prospect, deliver advice, and service clients over virtual channels (Internet, phone, chat, video conference). This is a boundary-less marketing environment and doesn’t put a premium on marketing to a local clientele. That’s a world where there’s no tennis, no kids’ bar mitzvas, and certainly, no shoulder-crying on your advisor when markets go bad.
- ol’ skoolers: This camp doesn’t envision a world where the delivery of financial services changes very much from what it’s been traditionally. Advisors have adopted email and websites and yes, are beginning to use social networks but ultimately, it’s a face-to-face business. You may buy diapers online but you’ll never really buy financial services online.
It might be easy to dismiss the ol’ skoolers as just that — financial dinosaurs who just can’t face the digital future of the business. We’ve got plenty of analysis like this from kasina pointing to the future and it appears to be digital: Continue reading “Will the future of wealth management really be “virtual”?”
Today’s Internet means unprecedented accessibility and transparency for investors — a huge opportunity to learn from and invest like some of the smartest and most talented investors.
One place this is clearly manifested is at Collective2.com, a marketplace of trading strategies. Whether you’re a publisher or a consumer, a writer or reader — investors can find thousands of investing systems on the site.
Not only can you follow some of these unknown Buffetts, you can also auto-trade them (program your brokerage account to replicate their every move).
Collective2.com‘s founder, Matthew Klein joins me on this episode of Tradestreaming Radio to discuss the foundation of the site and how some investors are getting rich by following some of the best trading models on the site — while the publishers of those models also make real bank.
Listen to the FULL episode
Continue reading “Creating a popular investment strategy marketplace – with Matthew Klein”
There’s a very interesting conversation happening over on Quora about the merits of the two online investing services: Betterment and Wealthfront.
What makes it even more compelling is that it’s being held between the CEOs of the two firms, Jon Stein and Andy Rachleff, respectively.
Stein (Betterment) used the following framework to describe why he thinks Betterment is the better solution:
- automation: Users seem to agree that Betterment is better integrated and more fully automated
- for serious investors: There’s more personalization available for Betterment users, as you can change your allocation and make trades square away.
- integration: Probably related to #1, but Betterment is both a broker and investment advisor, which means everything is branded Betterment, making a smoother ride for clients (Wealthfront uses Interactive Brokers as its brokerage and clients have to contact IB with questions on the actual account).
- better deal: lower fees
- tuned to behavioral finance: Betterment realizes how poorly most of its users would probably behave so it uses smart defaults to automate decision making.
- customization: Instead of just getting a model portfolio like you would at most RIAs, you can tweak things on Betterment to get it just the way you want.
Rachleff (Wealthfront) counters
Andy takes a different approach when sizing the two firms up. Here’s his framework why Wealthfront beats out Betterment.
- focus: WF targets young tech employees.
- sophistication: WF uses Modern Portfolio Theory (MPT) and therefore, Betterment should return less for every level of risk.
- determination of risk: WF uses a 10 question survey to set risk parameters and allocation while Betterment requires you do it yourself.
- minimums: $5k minimums at WF and they don’t charge until a client tops up to $25k or more. Betterment charges a subscription fee for small accounts.
- fees: it’s interesting to see that both firms feel they’ve got the better model here
- transparency: you get an allocation and portfolio recommendations before you open an account with WF, which you can then take and manage yourself. At Betterment, you don’t get rec’s until you open.
Of course, CEOs should behave as beknighted cheerleaders of their firms, so readers should understand where both Jon and Andy are coming from.
But what an awesome world we now live in where CEOs are engaging in the conversation to help users/investors understand which investing platform is right for them.
Read What are the main differences between Betterment and Wealthfront (Quora)
***FYI, I was contacted by Betterment’s Community Manager with the following clarifications:
Betterment is actually founded on modern portfolio theory. As you mentioned, it is intersected with Behavioral Economics so people actually implement the practices of MPT.
Regarding risk – Betterment makes recommendations for allocation based on goal type, time to goal i.e. if saving for retirement in 30 years, I can allocate more to stocks, say 80% stocks, 20% bonds. If saving for a major purchase, Betterment would recommend I allocate more conservatively. Then, the product shows me, in real time, the best and worst case scenario. Based on this information, I will understand my appetite for risk, and adjust the sliders accordingly.
Insider trading has been top of mind for the past few months with Galleon and Congressional insider trading blanketing the news. While illegal insider trading is being taken to the woodshed, there’s plenty to do with legal insider trading. By following the smart money, investors can follow the cookie crumbs back to the investing profits.
So, here are 12 ways investors can use insider trading data and information to make better, smarter, investment decisions.
Continue reading “12 ways investors can profit via legal insider trading”
A lot of people don’t invest because it’s seemingly too complicated.
So many decisions to make, so much jargon, who to trust?
Jon Stein is the founder and CEO of Betterment which he describes as a mix between Apple and Vanguard. It’s extremely easy to design a fine portfolio.
By removing much of the noise that distracts investors, Betterment has developed a 95% solution for 95% of investors. Plus, the firm is rolling out some functionality for investors who want a little more flexibility.
Jon’s growing an online asset manager from the ground up. He shared with me that Betterment has almost 10,000 customers already with mid-$20M under management (AUM), with many of them using the goals and planning tools the site has developed.
Jon joins us for this week’s episode of Tradestreaming Radio.
Continue reading “Making investing simpler – with Jon Stein”