“Despite record 1Q 2022 results and continued capital discipline, the disconnect between the energy sector weighting in the MSCI Wold Index relative to the oil market value is at its widest level since 2000“.
Most investors, including me, have limited experience of inflationary risk.
This paper, from 2021, is an excellent guide – looking at passive/active strategies across asset classes over the past 95 years.
As we have seen it is tough – unexpected inflation is bad for traditional assets (bonds, equities). Commodities do well but depends which ones. Trend following and active equity are the best protection.
How did the model portfolios on which ETFs are built fare five years after launch when compared to three years before? measured relative to the benchmark selected by the managers themselves.
The results aren’t pretty.
Thematic strategies that added 3-5% a year pre-launch, lost 4-5% a year in the five years after.
It seems that hype in various areas, leads to a launch of ETFs which then don’t add any alpha.
So be careful when you invest in the next hot thing via ETF.
Note this is just the model portfolio performance (e.g. index) and NOT the ETF itself (though it should track very closely after costs).
Thoughtful analysis of the venture landscape given the current state of public markets from Redpoint ventures.
The background is – public high performing SaaS firm valuations have fallen below their 10 year average now (see chart).
Past public market corrections led to 10 quarters of decline in venture dollars invested of varying severity. The great recession, for example, saw a 30% fall.
“Currently many companies in private markets (particularly at late stage) are in “price discover” mode in fundraises with everyone trying to figure out market price – rounds are taking longer to get done and “willingness to pay” spreads are wide“
Japanese companies bloated their balance sheets with low-yielding cash and unproductive assets. This has meant that companies delivered just 3% return on capital compared to 6% fo the developed world for the majority of the past four decades.
Returns look to be improving according to GMO, the change is structural and not cyclical, and the result of improving margins and not improvement in inefficient balance sheets.
One of the coolest tools I have come across is Composer.
Composer is an automated trading platform that allows savvy investors, like readers of Snippet Finance, to easily build a portfolio of hedge fund-like strategies.
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If you’re not ready to create a strategy from scratch, you can choose from a collection of vetted ready-made strategies.
Composer makes the kinds of strategies that are used by top hedge funds as easy to access as individual stocks.
Investing in securities involves risks, including the risk of loss. Borrowing on margin can add to these risks. Composer Technologies Inc., SEC Registered RIA.Snippet Disclaimer.
Useful chart from MRB plotting a sector’s percent share of total US market capitalisation on the x-axis and percent share of total market earnings on the y-axis.
It of course misses a lot of elements (e.g. growth of earnings, returns etc) but is still worth thinking about.
