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The Case for Global Small Caps Is Strengthening

by: Lawrence Hamtil  on Monday, February 19, 2018

It has been widely-discussed that 2017 was the first year in quite some time that just about every major region outperformed the U.S. equity markets, at least when measured in dollar terms.  What has been less discussed, however, is that global small cap stocks, - whether in Japan, Asia, Europe, or emerging markets, - outperformed small cap U.S. stocks by an even greater margin.  In fact, you would have to go back to 2005 to see such strong and widespread performance for non-U.S. small caps relative to U.S. small caps: Read More

Worried About the Economy? Look for Clues in Consumer Discretionary

by: Lawrence Hamtil  on Monday, February 12, 2018

The market's vicious sell-off has investors reacquainted with nervousness for the first time in a long time, and there has been no shortage of explanations for the return of volatility.  Some have breathlessly called this sell-off the start of a new bear market, never mind the fact that bear markets outside of recession are extremely rare, as CNBC's Michael Santoli points out this morning.   Read More

The Case for A Low-Volatility - Momentum Barbell

by: Lawrence Hamtil  on Friday, February 02, 2018

S&P's Indexology blog recently published a great paper titled "Outperformance in Equal-Weight Indices."  In the paper, the authors looked at several different ways in which investors could create "barbell" strategies with various equity indices.  For example, the authors demonstrated the usefulness of pairing the small company and value exposures offered by equal-weighting with a momentum strategy, as well as the utility of paring equal-weighting with low volatility.   Read More

The Bets You're Really Making

by: Lawrence Hamtil  on Tuesday, January 30, 2018

One thing that unites most financial managers these days is the assumption that asset allocation will be challenging in the years ahead, as valuations for both stocks and bonds all but guarantee muted returns in the decade ahead.  Unfortunately, most analysts who remind us of this reality fall short in terms of useful suggestions for just what to do about it, and when allocation advice is actually proffered, little is mentioned of the hidden bets those allocation suggestions are actually making. Read More

Why Low-Vol Strategies Make Sense Now

by: Lawrence Hamtil  on Tuesday, January 23, 2018

2017's strong market resulted in the largest outperformance for the S&P 500 index versus its low-volatility counterpart since 2013: Read More

The Case for Cash

by: Lawrence Hamtil  on Wednesday, January 17, 2018

Back in 2016, Meb Faber wrote a post titled, "What's Wrong With Cash?" in which he advocated for a constant allocation to cash if for no other reason than to curb poor investment behavior.  Of course, at the time Meb wrote the article, cash returns were virtually nil, with three-month Treasury bills (a proxy for cash) yielding around 50 basis points, so peace of mind was about the only return investors could then expect on cash. Read More

The Pain of Discipline or The Pain of Regret?

by: Lawrence Hamtil  on Friday, January 12, 2018

With the relentless rise of equities over the past year, several clients have inquired of me whether they should be more aggressively postured with their investment portfolios.  Sensing that, for some, prior fears of market downturns have now been replaced with 'fear of missing out' (or "FOMO," as the term goes), I am always quick to remind them to think back over the past ten years and to remember how emotionally exhausted they all were during the declines of 2010-2011 and 2015-2016, let alone during the breathless descents of 2008-2009. Read More

The Limits of CAPE Analysis for Global Market Rotation

by: Lawrence Hamtil  on Monday, January 08, 2018

The cyclically-adjusted price to earnings ratio, or "CAPE" ratio, is an extremely useful tool for valuation analysis as it has been shown to have a high explanatory power for market returns.  This has been demonstrated not just in the United States, but in many other world markets, too. Read More

Top 10 Posts of 2017

by: Lawrence Hamtil  on Tuesday, December 19, 2017

I am quite thankful for everyone who has helped spread the word about my blog over the last couple years.  I am humbled to say that this year a few of my articles were even referenced by some of my finance heroes, such as Matt Levine, Jeff Saut, Matt Klein, and the Alpha Architect crew.  It is a challenge to write on a regular basis, but it is one that I feel is richly rewarding.  It is a bonus, of course, if any readers find the articles useful. Read More