Kristor Lawson's blog

Safety of your Financial Assets

Wed, 1 Oct 2008 16:01:56 -0700

The last two weeks have seen vast changes to the financial industry in this country. These are so much in the news that there is little point in reiterating the lengthening list of investment banks, thrifts, and insurers that have failed, been bought, seized, or bailed out by the Treasury or the Fed. Because so many enormous, and venerable, institutions have been affected, investors may naturally worry, not just about the state of the markets and the economy, but about the safety of their financial assets. Indeed, we have received a few telephone calls from clients concerned about this issue. We therefore thought it would be appropriate to clarify the asset protection offered to our clients by their custodians (SCLC is not itself a custodian, and thus has no client assets to protect).

Recent Market Volatility

Wed, 1 Oct 2008 16:01:07 -0700

Recent market volatility, triggered by unexpected events such as the Bank of America takeover of Merrill Lynch, the bankruptcy filing by Lehman Brothers, and Federal support for insurer AIG, has led to increased press coverage of events on Wall Street. While this increased coverage is natural, much of it is misguided, thus unhelpful, and may exacerbate investor worries. Consider the following dialogue from a TV news program about the market “chaos” of the last few days:

Reporter: Do you see a bottom to this market?
Guru: No, the bottom is not yet in sight.

Reporter: How long will this market turmoil last?

SCLC's Patrick Collins releases working paper on investment prudence for fiduciaries.

Fri, 28 Sep 2007 14:10:28 -0700

The main article from the Q2 2007 Investment Quarterly (on optimal size for actively managed funds) was adapted from this much longer and more comprehensive paper by Patrick Collins. It addresses many other issues relating to investment prudence for fund managers.

Without More

Investment Quarterly, Q2 2007

Wed, 19 Sep 2007 10:33:32 -0700

Does Size Matter?

The only reason to invest in actively managed funds is to earn alpha: returns greater than those of the market. As active funds accumulate a history of such returns, they naturally attract more and more money. But for various reasons, it turns out that as an active fund grows, it becomes harder and harder to earn alpha. In this quarter’s main article, we explore why that is so, and whether there is such a thing as optimal size for actively managed funds.

The article is adapted from a much longer paper addressing many issues of investment prudence for fiduciaries, written by our own Patrick Collins, and available here.

Investment Quarterly, Q1 2007

Wed, 19 Sep 2007 10:33:56 -0700

Our main article this quarter reviews the venerable subject of portfolio diversification. Why is it important to diversify? You’ll know exactly why, by the time you finish reading.

Investment Quarterly Download

SCLC Evaluates Schwab's Equity Ratings

Mon, 6 Jun 2005 10:30:19 -0700

In this edition of Investment Quarterly, we discuss systems for picking top-performing stocks, with particular focus on the Schwab Equity Ratings, a relatively new system that has recently performed well relative to its benchmark. We illustrate why the selection of an appropriate benchmark is essential for evaluating any stock picking system, and how market conditions can skew our perceptions. Finally, we pose an intriguing question—if a stock picking system worked, would you use it? The answer may surprise you.

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