JPS Global Investments — Summer 2014 Newsletter
Sometimes change is good. In that spirit, I have revamped my newsletter. Whereas in letters past, I have provided a digest of the markets, I have decided to take a different tack going forward and share some personal observations and anecdotes of the world of investing with you. Rather than trying to take a panoramic picture of what is an ever changing landscape I will focus on finding unique snapshots that I hope you will find interesting, insightful, and at times perhaps even amusing.
JPS Global Investments — Spring 2014 Newsletter
Whereas in much of the country summer has been underway for a while, here in Portland it is not reliably summer until after the 4th of July, at least according to the locals. It only takes a rainy day or two in June for that assertion to persist. In similar fashion, non-Oregonians believe it always rains in Portland. It really doesn’t. Where am I going with this? Once people have framed a belief, they will look for the data points to confirm and perpetuate it. Let us segue to real estate. One often hears the phrase “real estate is the best long-term investment,” but is it really true or is it just perpetuated by behavioral biases that filter out all evidence to the contrary?
JPS Global Investments Newsletter Volume 6, Issue 4: The Quarter in Review (01/13)
2012 was a good year for US stocks. The S&P 500 Index started the year at 1,258 and closed 13% higher at 1,426. Globally, the story was much the same, with the MSCI All Country World Index closing up 13% as well. Investors, meanwhile, continued to be fixated on bonds, especially the riskier bond categories as they stretched for yield. The yield on high quality bonds barely compensates for inflation and comes with significant interest rate risk, which is why investors are engaging in this yield-versus-quality trade off. It might make more sense to solve the yield problem with a tilt toward stocks, considering that the yield on the stock market is actually higher than the yield on the 10-year Treasury, which - except during the height of the financial crisis - has not been the case since the 1950s.
JPS Global Investments Newsletter Volume 6, Issue 3: The Quarter in Review (10/12)
“Sell in May and go away,” an old Wall Street adage that suggest one is better off getting out of the stock market in May and coming back sometime after the summer, though when exactly is not entirely clear. This would have worked nicely in 2010 and 2011 and 2012 seemed set to repeat the pattern. However, it didn’t. At the beginning of May, the S&P 500 Index stood at 1,397 and by June 1st it had dropped to 1,278, but then the tide slowly turned, as would only become clear in retrospect, and the S&P 500 ended up at 1,440 at the close of the third quarter, up 5.7%. Though I agree that the market is inefficient, I don’t believe it is so inefficient that investors are well served to sell in May, or sell because an original AFL team wins the Super Bowl, or other variants of reading the tea leaves. Investing is hard and humbling work and unfortunately I don’t know of any short cuts.
JPS Global Investments Newsletter Volume 6, Issue 2: The Quarter In Review
As we have seen many times before over the last couple of years, the news out of Europe cast a dark shadow over global markets, with sentiment turning tentatively positive yet again towards the end of the second quarter. Whether this time is different, time will tell. The core of the issue remains constant: Germany and its northern allies don’t want to write a blank check to periphery Europe without safeguards that involve ceding power over national budgets and banking oversight from national governments to EU institutions. Once these powers become European rather than national, Germany believes it will have greater leverage to enforce fiscal austerity and balanced budgets.