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Innovation, Disruption, and the Illusion of Value

by: Lawrence Hamtil  on Friday, August 18, 2017

Ten years ago, investors interested in the rapidly growing mobile device market were presented with two options, "Company A," which was the dominant player in terms of market share, and "Company B," which was a known player in the technology sector, but a newcomer to the mobile phone industry.  For value investors, the choice seemed to be clear as Company A traded at a steep discount to Company B no matter what valuation metric was used: Read More

The Real Benefit of Low Vol Strategies

by: Lawrence Hamtil  on Wednesday, August 09, 2017

In recent years, much has been written about the rising popularity (as measured by fund flows) of low-volatility portfolios with investors.  All sorts of explanations have been offered for this phenomenon, almost all of them specious.  For example, a popular theory holds that investors are now using low-volatility equity portfolios as 'bond replacements,' given anemic yields on traditional fixed-income.  More reasonably, another theory simply states that investors are engaging in performance-chasing, as returns on historically less volatile sectors such as utilities and consumer staples have been quite healthy over the last few years.  Whatever the explanation for the inflows, one recurring caveat issued by commentators has been that investors in low-volatility funds are trying to have the reward of the stock market without the risks that investing in equities entails as surely at some point volatility would reach even these quiet sectors of the market. Read More