Q2 | Use Calm Markets to Define Goals

Periods of low volatility allow you to shift focus from returns to goal planning

The second quarter of 2017 was much like the previous two, continuing the trend of low volatility despite global political uncertainty and events including the Syrian war and refugee crisis, Brexit, terrorism in Europe, the political aftermath of the U.S. election, and a growing North Korean nuclear threat.  During the second quarter, we saw positive returns from every asset class.  Developed international and emerging markets equities outperformed the U.S. market.  In the U.S. and emerging markets, large caps outperformed small cap stocks and growth stocks outperformed value.  In developed international markets, small outperformed large and growth outperformed value.  Almost all developed market currencies outperformed the U.S. dollar, most notably the Euro. 

Do Stocks Outperform Treasury Bills?

By Brent Everett

New research published by Arizona State University finance professor Hendrik Bessembinder helps explain why stock picking is so incredibly difficult that active managers rarely outperform their benchmarks – and why it makes much more sense to diversify. Professor Bessembinder’s working paper titled “Do Stocks Outperform Treasury Bills?” compiles data from the Center for Research in Security Prices (CRSP) at the University of Chicago and concludes that only a very small percentage of winning stocks have done exceptionally well and that, since 1926, 58 percent of all individual stocks failed to outperform even the middling return on one-month treasury bills.

Talis Update on WannaCry Ransomware

By Stephen Hart

Over the weekend you most likely heard of the latest virus attack, the WannaCry Ransomware. WannaCry functions a bit differently than your typical virus. Once your computer is infected, the virus will seek out the most important files on your computer and encrypt them, making your computer completely unusable. The only way to regain access is through paying a ransom, which starts at $300, and continues to climb the longer you don’t pay up and eventually deletes your files. As of right now there is no fix for the virus, and estimates are that hundreds of thousands of computers have been infected.

The Devil's Financial Dictionary

We are going to be featuring excerpts from Jason Zweig's book The Devil's Financial Dictionary. It hits the nail on the head in clarifying jargon related to the financial industry. 

Regulator, n. A bureaucrat who attempts to stop rampaging elephants by brandishing feather dusters at them.

2016 Performance of Premiums in the Equity Markets

A key concept in understanding our investment philosophy is tilting portfolios toward factors that produce excess return. In this presentation, we examine the market, company size, relative price and profitability premiums over time.

The Pioneering Women of Finance and Economics

By Gina Petrelli Aldaz

In the spirit of International Women's Day, we honor women who made notable contributions to society and managed to breakthrough gender barriers. In the traditionally male-dominated world of finance, we have had our own share of hidden and not so hidden figures.

Below we take a look five women recognized in the American Museum of Finance who made their mark in finance and economics beginning as early as 1764.

What You Should Understand About the DOL Fiduciary Rule

By Brent Everett

First, a fact about where we stand: we support a fiduciary standard for all financial advisors that is applied consistently and is enforceable by the proper regulatory authority.  The Department of Labor (DOL)’s Fiduciary Rule, while perhaps well-intended, is not that – in fact, it’s not even close.  Unfortunately, like so many issues recently, it has become a lightning rod for polarized opinions.

A formula that identifies fraud? You can count on it.

By Stephen Hart

From the IRS, to your local bank, to a multi-billion dollar financial custodian, any and all are subject to people trying to commit fraud. Whether it’s fudging the numbers a bit here or there or attempting to cash in falsified checks, the financial industry constantly seeks new safeguards to keep client money safe and to make sure they themselves are not being taken advantage of. But as it turns out, an easy way to spot fraud is through a simple mathematical convention, commonly known as Benford’s Law.

Q4 | Big Year for Small and Value

By Brent Everett

As we discussed in the annual letter, equity performance in 2016 was strong, particularly in US and emerging markets.  Both the US and international bond markets performed well for the year, although all asset classes except US equities suffered losses in Q4.  US equities had an exceptionally good Q4, with the broad US market up 4.21% for the quarter.

Trading Places

The classic ‘80s comedy, Trading Places, seems to enjoy a surge in popularity around Christmas every year. And, almost every year, someone asks me to explain how Billy Ray Valentine (Eddie Murphy) and Lewis Winthorpe III (Dan Aykroyd) made a fortune with frozen concentrated orange juice (FCOJ) futures. It occurs to me that this is a good opportunity to explain how futures contracts and short selling works.

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