I’m Hiring!

If you are an A+ candidate, incredibly sharp, gritty, and super hungry, come join us!  We are looking for:

National Director of ETF Sales

Internal/External ETF Wholesalers

Shoot an email to info@cambriafunds.com

(Don’t expect an immediate response, out of the country for 2 weeks)

Million Dollar Fintech Ideas

Years ago I wrote about a number of great fintech ideas no one was tackling.  It is great to see people working on all of them!

As an example, I was excited to see Wes build out his tools section of Alpha Architect.  Want to backtest moving average rules on a global portfolio?  No problem:

 

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A summary of some of the various with new firms listed…missing any?

1 – Public Alts newsletter

2 – Quant Backtester

3 - Tax Harvesting

4 –  Investment research boutique focused on private crowdfunded companies

5 - Investment newsletter focused on Best Ideas

6.  Rukeyser Reborn - Barry Ritholtz is in the lead here with an excellent Bloomberg podcast.  Atlucher is great with a slightly different angle.  

7.  TheStreet.com 2.0 - Yahoo Finance, BusinessInsider, and TalkMarkets seem to be the leaders here.

The Best Investment Newsletter Out There

For those that are not familiar, I run an email service called The Idea Farm.  The goal is simple: sort through the flood of white papers, books, investment newsletters, and general noise to find the 1 or 2 best ideas or research pieces each week.  Honestly, I think the two pieces I mailed out this week have been worth the price of subscription alone.

Starting at the end of the year I’m going to raise the price (a lot) to try and keep the list small, but anyone subscribing prior to January 1 will be grandfathered in at the current rate, forever.  What you receive:

> 1-3 emails per week with the best investment research.  Some weeks zero, some more than 3.

> Free copies of all of my current and future books

> Excel backtester for testing asset allocations and tactical portfolios (will update in January)

> Quarterly country stock valuation updates across CAPE and other metrics

> Hedge fund profiles of my favorite 30 hedge funds to track with stock picks

>Access to all of the archives, updating quarterly

And maybe a sneak peak at the below graphic…The Idea Farm

Poker Table (2)

 

 

August Tweets

From @MebFaber and favorites:

 

Books on the Way

A few reads on the way or on my nightstand:

added one more I forgot: Dual Momentum by Antonacci

Zero to One – Peter Thiel

Millennial Money – Patrick O’Shaughnessy including special offer with lots of goodies here

World Order – Henry Kissinger 

Deep Value – Toby Carlisle

Spy the Lie – Philip Houston

The CAPE Ratio Doesn’t Work

because of “X”.  Market participants love focusing on the details while often avoiding the greater picture.  And almost always they find ways to justify whatever market stance they have. Most bulls are now finding holes in all the valuation metrics the same way most bears in 2008 and 2009 were finding ways valuation metrics were different that time.  They never are.

So, my argument to the CAPE ratio haters – fine, don’t use it.  Let’s substitute in dividends, book values and cash flows, three totally different metrics.  I sent this piece to The Idea Farm the other week with actual values, but below are the rankings for all the countries in the world by the four metrics, and then by an average of all .  Notice anything?  

They all agree.  (For the most part, not exact of course… ) Poor Denmark.

 

all metrics

 

 

13F Investing Doesn’t Work, Right?

I’ve been writing about 13F investing strategies for a long, long, time.  Almost no where else in finance is there more disinformation on a topic.  Honestly, I don’t think the SEC should make funds publish their holdings, but since they do, it is silly to not track what other managers are doing.  

My first article on Seth Klarman was over 7 years ago (wowza).  I used to even write some articles for Forbes print magazine on the topic.  The last time I did I covered Seth Klarman’s Baupost Group.  And sure enough I had a ton of hecklers online and sure enough a few weeks after the post he had a biotech stock get bought out.

Fast forward to 2014 and this summer Klarman owned Idenix which got bought out for a whopping 200+% premium netting Baupost over a billion dollars.

His simple top 10 clone has beaten the market by over 10% a year since 2000, and 10/15 years since 2000.

2014?  Up 50%.

Yep, nothing to see here.  My favorite thing about Baupost though is their holdings are almost always unique.  Many hedge funds simply look like a copycat of other funds.  Equity curve followed by top holdings:

Source: AlphaClone (PS know who else is having a great year? Pershing Square….)

 

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Travel and Talks

I’ll be in the following cities to give some talks, come say hello!

Atlanta, Wed September 10th, ASFIP

Chicago, Sep 15th-19th, State Street and Morningstar Events

Charlotte, Sat Sep 20th, CFA/MTA Luncheon

Asia (Thailand and Bhutan), October 1-14

Sante Fe, Oct 16th-17th, private event

Portland, November 15th, AAII

Houston, January 15th, FPA

ETF.com, January 26th-28th

Everything You Need To Know About the CAPE Ratio

I just got back from 5 days backpacking and fishing in King’s Canyon (next to Sequoia) at a place called Rae Lakes.  It has been on my bucket list for years, and it did not disapoint.  Here is a quick photo before we dive into all things valuation related.  Lots and lots of (little) trout.

 photo (5)

 

So, there has been a lot of discussion about the CAPE ratio on social media lately.  I’ve been writing on CAPE for a long time, including dozens of blog posts, a white paper, and a book - Global Value.  (I’ll even send you a free copy if you agree to write an honest review on Amazon, just email me.)  We launched an ETF on the findings at has been one of the top 5 launches of the year.  Barry did a nice post with links to a lot of writers thoughts on the topic.  I’ll add some of my findings with links below from the blog over the years.  

Is the CAPE ratio good at predicting future returns? (Yes) Is it perfect? (N0)

Does the CAPE ratio work on individual stocks? (Yes)

Does the CAPE ratio work for sector rotation? (Yes)

Does valuation and sentiment correlate? (Yes)

Using CAPE to get out of stocks in the 1990s, is that a bad thing? (No)

Do accounting changes matter (Not really)

Does 2008/2009 matter? (No)

Does it matter what CAPE ratio you use? ie 1,3,5,7, 10 year? (Not really)

Can you combine trend and valuation to time the stock market? (Yes)

Does buying expensive markets result in bigger losses? (Yes)

Do the best and worst times in history to invest correlate with value? (Yes)

Another post on trend and value

Behavioral reasons value works

 

 

and Global Valuations

 

Does CAPD work too? (Yes)

Does CAPD say the same thing as CAPE? (Yes)

CAPE ratio Bollinger Bands

Are market cap weighted bubbles one reason the CAPE ratio works? (Yes)

Did the CAPE ratio work in 2013? (Yes)

How long does it take to work off a CAPE ratio bubble? (About 2-4 years)

Does it matter what value metric you use? (Not really) also here

How big was the US bubble? (Normal for bubbles, tiny vs. Japan)

Are most stock markets cheap? (Yes)

Does adjusting CAPE ratio for inflation make sense? (Perhaps)

Does CAPE simply correlate with drawdowns? (Yes) and here

Asness on CAPE

Arnott on CAPE

Business Radio Podcast

I can’t rec these interviews enough.  Barry Ritholtz chats up lots of investment luminaries including Gundlach, Arnott, etc….bookmark!

http://www.bloomberg.com/podcasts/masters-in-business/

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