Shareholder return is the holy metric by which all equities are compared, but what factors actually influence the returns shareholders get from their equity holdings? In October 2023, Morgan Stanley’s Michael J. Mauboussin and Dan Callahan put out a paper that offers a framework of the key components that drive shareholder returns. To clearly show …
What fundamentals ultimately drive share prices? Read More »
“Buy to the sound of cannons, sell to the sound of trumpets.” The above quote, presumably said by the famous banker Nathan Rothschild, is repeatedly quoted when a new conflict pops up. Is it any truth in it? Let’s start by finding out how stocks have performed during conflicts and war. We use the US …
Even though gold is generally a volatile asset, it is often considered a key diversifier, hedging against inflation or protecting during economic uncertainties. Pim van Vliet and Harald Lohre conducted research on this phenomenon – and found that in times of extreme macroeconomic events, including war, hyperinflation, or major economic recessions, gold investing is widely regarded …
The year’s midpoint is a natural time to reflect on how fundamental events have unfolded…. Six months ago, 2023 was expected to witness the most anticipated recession ever, a view strengthened three months ago by three of the four largest bank failures in history. Equity markets have been unfazed by the regional banking crisis, rallying …
Are we in a Bear Market rally? Or is a new Bull emerging? Read More »
Asset class correlations refer to the degree to which the returns of different asset classes move in relation to each other. A high positive correlation indicates that two asset classes tend to move in the same direction, while a high negative correlation implies that they move in opposite directions. Understanding these correlations can help investors make informed …
Whether we like it or not, the technological advancement of generative AI has crossed a threshold from which there is no turning back. Since its release, ChatGPT’s usage have grown faster than any other consumer product in history, showing the insatiable demand for AI assistance. While in the pre-ChatGPT era we often thought of manual-based …
What is Sell in May and Go Away? An investment strategy based on the theory that the stock market underperforms in the six-month period between May and October – Sell in May and Go Away refers to a well-known adage in the business and financial world. Stock markets have previously underperformed in the six-month period …
You’ve probably heard investing professionals talk about risk-adjusted returns. This is a way of measuring the performance of an investment that factors in risk—specifically, the extra risk required to get higher returns. The Sharpe ratio is a way to measure the risk-adjusted returns of your investments. What Is the Sharpe Ratio? Investments can be evaluated …
The Sharpe ratio is a well-known and well-reputed measure of risk-adjusted return on an investment or portfolio. It was developed by the economist William Sharpe. The Sharpe ratio can be used to evaluate the total performance of an aggregate investment portfolio or the performance of an individual stock. The Sharpe ratio indicates how well an equity investment …
The January Effect is an investing theory that suggests that the performance of the stock market in the month of January can be used to predict the performance of the stock market for the rest of the year. According to the theory – first posited by Yale Hirsch in 1972 – if the stock market …
