Portfolio

Investing in Emotional Assets

When Morty discovered my vacation plans this year included Cremona, that put a bee in his bonnet. Did I know it was the home of the famous Stradivarius workshop? Was I going there to check out violins? Yes and no, I said. My preference was to cycle along the Po valley and sip espresso near the Zodiac Tower. “Maybe you should think twice about your visit,” Morty said. “I happen to have it on good authority that beautiful collectibles can be a solid component of your portfolio.” “Please Morty, don’t make wild-eyed guesses about other people’s money,” I said. Especially […]

Fama-French 2. Three is Now Five?

Fama and French, originators of the three-factor model for asset pricing, are working to understand the fourth factor –and a fifth factor, too, said Marlena Lee, PhD, VP of Dimensional Fund Advisors. She should know; she has worked closely with Nobel laureate Gene Fama and was his former teaching assistant at the University of Chicago Booth School of Business. Lee spoke at the CFA Society Toronto on June 19, 2014, about the evolution of asset pricing. Part 1 summarizes her comments on the dimension of profitability. Could there be another component? As early as 1993 Jegadeesh and Titman had proposed […]

Fama-French Model 1. Three is Now Four

Does the Fama-French three-factor model adequately capture all information available in describing stock returns? According to Marlena Lee, PhD, VP of Dimensional Fund Advisors, the three-factor model is lacking one or two important components. Lee visited the Toronto offices of the CFA Society Toronto on the afternoon of June 19, 2014, to speak to over twenty financial experts about the evolution of asset pricing. Lee was a funny and forthcoming lecturer. After her flight from the States up to Toronto, she said the suspicious Canada Border Services officer asked: “This CFA Society… what does ‘CFA’ stand for?” She momentarily blanked: […]

SM 2. Good Insight Into The Social Ecosystem

“Customers, employees, and suppliers are empowered” through social media, said Barbara Gray, CFA, Equity Analyst and Founder of Brady Capital Research, (BCR) and this fosters the growth of firms that behave responsibly to them. Her company actively promotes investment in companies with “positive social capital.” Gray was the second panellist (of four) to address the topic “The Impact of Social Media on the Investment Process” at a CFA Toronto Society gathering held in the gallery of the TMX Broadcast Centre on the evening of May 21, 2014. As an example of negative social capital, she cited a case of Air […]

8 Things About a Winning Team

“Our firm is kind of like a teaching hospital,” said Kim Shannon, President, Founder and CIO of Sionna Investment Managers. The second part of her presentation to the CFA Society Toronto at the National Club on March 5, 2014, described what she looks for in her employees, and how the team works. Below are eight insights on selecting and retaining top talent. Grow their own – Shannon noticed early on that the most successful investment firms grew their own talent, namely, they hired junior employees and trained them over a period of years for senior positions. Greed is not good – […]

The Value Proposition

“I believe financial statements are as much marketing documents as statements of fact,” said Kim Shannon, President, Founder and Chief Investment Officer of Sionna Investment Managers. She was addressing a crowd of analysts and financial managers at a breakfast meeting organized by the CFA Society Toronto on March 5, 2014, in the historic National Club. The first part of Shannon’s presentation tied in directly with her new book, The Value Proposition. Shannon wrote 80 pages of the first draft, and then stopped while she established the company and guided it through the next decade (which included the 2008 financial crisis). Years […]

A Low Volatility Equity Strategy

Despite conventional wisdom, “the returns on more volatile equities have not exceeded the historical returns on less volatile equities,” said Grant Wang, Senior Vice-President and Head of Research at Highstreet Asset Management in London, Canada. He was the first of two speakers at the GARP Toronto Chapter meeting held at First Canadian Place at King & Bay, Toronto on the evening of January 30, 2014. Wang began with a brief survey of the increased volatility in equity markets over the past several years: the 2001 tech bubble, the 2008 housing crash, and the 2011 European debt crisis. “VIX has posed […]

Europe: Is the worst over? Part II.

“Deleveraging takes a long time, and it is painful,” said Philippe Ithurbide, Global Head of Research, Analysis and Strategy at Amundi Asset Management. In the second part of his presentation to the CFA Society Toronto on November 19, 2013, he discussed solutions to European financial difficulties. Deleveraging must be helped along in order to shorten the time and reduce negative socioeconomic impacts. “Never in history have we seen the deleveraging of all the players at the same time.” “Banking credit is faltering everywhere in the euro zone,” said Ithurbide. Euro zone bank credit is still highly fragmented by nation, with […]

Europe: Is the worst over? Part I.

“The US had one financial crisis in 2008, but Europe has had two crises—2008 and 2011,” said Philippe Ithurbide, Global Head of Research, Analysis, and Strategy at Amundi Asset Management. He was addressing members of the CFA Society Toronto that had gathered in the TMX Group Centre in downtown Toronto on the evening of November 19, 2013 to hear an overview of European market trends. The first half of his talk was a comprehensive quantified description of the financial woes of the euro zone, followed by several proposed solutions and investments strategies in the second half. In the quarters since […]