Investing Links of Interest – April 1, 2013
USA Today’s Mike Krantz reports the stock market is shrinking as firms are delisted, go private or are bought out.
“The stock market is going private,” says Robert Maltbie of Singular Research. “It keeps self consuming.”
Hedge Fund alpha is in limited supply.
For the period 1998-2012, Bernstein analyzed Hedge Fund Research’s Global Returns series using a three-factor analysis — meaning analyzing the exposure to the risks of the stock market, small stocks and value stocks. He found that while hedge funds showed significant outperformance early on, that outperformance shrank and then turned negative as investors chased those returns.
Source: CBS Moneywatch
Demographics appear to be key in economic growth slowdown.
Even after accounting for demographic shifts, participation among men aged 25 to 54 has still fallen much more sharply in America in the past decade than in other rich countries. That suggests that America does a poor job of keeping the unemployed, particularly the unskilled, in the workforce. Too many end up on disability support with little prospect of returning to work.
Source: The Economist
Sy Harding advises investors to avoid individual stocks to achieve better performance with substantially reduced risk.
Yet, in spite of all the evidence that by far the majority of even full-time professionals cannot match the market’s performance, millions of individual investors persist in thinking they can select a portfolio of individual stocks that will beat the market (and also the professionals).
Source: Business Insider
Investors will be tempted to jump on the bandwagon – as always after a big advance.
The dismal truth is that over the long run, the average person is a woeful investor, regularly losing money to more skillful traders. Dalbar performs an annual survey of actual investor returns in mutual funds, and compares them to the return of the overall market. He shared the latest, still unpublished figures with me. They tell a sorry story.
Over the last 20 years through December, the average return of all investors in United States stock mutual funds was 4.25 percent, annualized. Over the same period, the benchmark Standard & Poor’s 500-stock index returned an annualized 8.21 percent. That’s a huge gap — nearly four percentage points a year over two decades.
Source: The New York Times