We are finally seeing articles about how higher costs for labor, commodities, and raw materials are affecting companies. It’s likely that earnings expectations were just too rosy and the market has adjusted to a more realistic outlook on profit margins. Read the full article in The Wall Street Journal
When index funds comprise 40% of all trades, and they are only selling, with less traders active (not passive), there are fewer bids on the other side, forcing prices down even further. This is an obvious, but very real, hazard of passive investing trends. Read the full story in The New York Times
Here is an article from The Economist that details the dangers of structured products, such as Credit Suisse’s XIV which collapsed spectacularly last week. Banks like to sell these products to institutional and high net worth clients because they generate fees for the banks and often times are not well understood by the clients –…
The many problems with GE’s financial reporting has made it difficult for both managers and investors of GE alike to assess the health of the conglomerate. At Aureus, we feel it’s important provide clear and concise client reporting so that both ourselves and our clients are able to properly assess their current financial situation and have the necessary…
Why can’t wages climb? Because huge companies buy out competitors and then cap salaries to insure that profitability rises, justifying the purchase price. True in everyone in every industry, including farm-equipment mechanics. Read the full article in The New York Times
Kari offers her recent views on the market in an article she published for CNBC. She highlights the importance of cynicism in a rising market to protect clients from permanent loss of capital. Read the full article on CNBC.com
If the HuffPost is dropping their non-paid contributors, costs go way up, signaling the inevitable end of free access to websites like this. They must believe that readers will pay for content. If not, can they survive on advertising? After 30 years, we are about to find out who can generate profitability in digital media….
While ESG funds are being raised at a rapid pace, they represent a very small percentage of stocks and therefore their influence on management teams is questionable. However, BlackRock is one of the largest investors in stocks through its passive iShares index platform, which heretofore had itself taken a largely passive stance with regards to…
This article from The Economist lays out the reasons for and potential fall-out from MiFID2. If the new regulation ultimately results in fewer sell-side analysts covering stocks, it should increase the opportunity set of mis-priced securities for those who continue to pursue active investing, such as ourselves. Read the full article in The Economist
This article is important but misses something. Not only do CEO’s today need to provide leadership regarding appropriate behavior norms at their companies but they also need to lead by example. Read the full article in The New York Times