Are Investors Switching From Active to Passive or From Passive to Cheaper Passive?

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It’s been awhile since we’ve weighed in on the active/passive debate so we thought we’d toss our hat in the ring yet again and try to explain the asset migration that is taking the fund management industry by storm. The “wisdom” behind switching from active to passive investment products goes something like this: Passive products […]

Three Reasons to Expect a Stronger Euro in the Months to Come, and What it Means for Your Portfolio

With the euro up another 50bps today against the USD, we thought it timely to review some fundamental factors that should act to support the longer-term trend higher in the euro. No doubt, this week’s substantial move was partially instigated by what were viewed as hawkish remarks by the ECB. Yet, there are at least […]

How Much Longer Can Speculators Get of Bonds?

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The last six months has seen one of the most incredible changes in investor positioning in 10-year US treasury bonds in recent history. Back in early January, around the time rates peaked, non-commercial traders (AKA speculators) were net short 10-year options and futures contracts by a whopping 17% of open interest. Fast forward to today […]

Our Contrarian Call: A Bullish Thesis on the Energy Sector

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Back in December 2016, we discussed our expectation for lower longer-term US interest rates, which we used to justify an aversion to financial stocks. This expectation played out. We also discussed our rotation into the resources sector. We suggested that sometimes rotations can be bumpy, and indeed the last six months has been a bumpy […]

Risk Management 101: Diversification (Easier Said Than Done)

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There are three basic ways to manage the risk of an equity portfolio: Diversify, by owning a collection of stocks from different industries Hedge, by shorting stocks or equity futures Buy insurance, like buying an out-of-the-money put option. The essence of diversification is choosing assets that are not perfectly correlated with each other. The logic […]