This document summarizes research analyzing whether small cap stocks are well positioned to weather an economic downturn caused by the COVID-19 pandemic.
The research finds that small cap companies' financial characteristics, such as leverage, leading into the crisis were consistent with long-term trends. Historical data also shows no relationship between the rate of small cap company delistings and relative small cap stock performance. While small caps may be more vulnerable operationally, market prices already reflect expectations about future cash flows, including recession impacts. Overall, the research finds that small cap stocks can still deliver higher expected returns even during an economic downturn. Investors are thus advised to maintain a diversified portfolio including small cap stocks.
We think that we fully understand the costs/benefits of the financial engineering sold by brokers until we don’t. Potential for Vulnerabilities in MLPs by Bank MS => MLPs rely on capital markets to continuously grow (low r, high yield). (Potentially Overvalued) Overall MLPs carry a greater interest rate risk concentration than equities. (what doesn’t appear to be priced yet) and how man-made accumulations in the debt-commodity linked products can distort the Supply and Demand in the Commodities ?
John J. Cortale Presents - Don't Let Media Headlines Cripple Your FutureJohn Cortale
John J. Cortale Presents - See beyond today’s worrisome headlines, take advantage of future trends, and put long-term investment strategies to work for you
We think that we fully understand the costs/benefits of the financial engineering sold by brokers until we don’t. Potential for Vulnerabilities in MLPs by Bank MS => MLPs rely on capital markets to continuously grow (low r, high yield). (Potentially Overvalued) Overall MLPs carry a greater interest rate risk concentration than equities. (what doesn’t appear to be priced yet) and how man-made accumulations in the debt-commodity linked products can distort the Supply and Demand in the Commodities ?
John J. Cortale Presents - Don't Let Media Headlines Cripple Your FutureJohn Cortale
John J. Cortale Presents - See beyond today’s worrisome headlines, take advantage of future trends, and put long-term investment strategies to work for you
Five years after the worst economic crisis of our lifetimes, we are still feeling the after-shocks around the world.
Our recent financial past seems to herald one certainty for our collective
financial future: The investment world we grew up with has changed utterly.
Conventional wisdoms shaped by decades of high-return investing — first in equities from 1982 to 2000, then in fixed income markets over most of this century — need to be reexamined, revised, or even scrapped.
A look at how we got into this mess of a financial meltdown, what to do in the midst of it, and how to capitalize going forward. This presentation illustrates the need of hiring a professional advisor to help you manage your emotions during times of uncertainty.
The allocator shows in detail our view on the financial markets and give insight on our asset, sector and geographical allocation. It can go from 0 - 100% in equity and is actively rebalanced on a monthly basis.
Emerging markets are an important part of a well-diversifed global equity portfolio. However, recent history reminds us that they can be volatile and can perform differently than developed markets. In this article, we provide a longer historical perspective on the performance of emerging markets and the countries that constitute them. We also describe the emerging markets opportunity set and how it has evolved in recent years.
Five years after the worst economic crisis of our lifetimes, we are still feeling the after-shocks around the world.
Our recent financial past seems to herald one certainty for our collective
financial future: The investment world we grew up with has changed utterly.
Conventional wisdoms shaped by decades of high-return investing — first in equities from 1982 to 2000, then in fixed income markets over most of this century — need to be reexamined, revised, or even scrapped.
A look at how we got into this mess of a financial meltdown, what to do in the midst of it, and how to capitalize going forward. This presentation illustrates the need of hiring a professional advisor to help you manage your emotions during times of uncertainty.
The allocator shows in detail our view on the financial markets and give insight on our asset, sector and geographical allocation. It can go from 0 - 100% in equity and is actively rebalanced on a monthly basis.
Emerging markets are an important part of a well-diversifed global equity portfolio. However, recent history reminds us that they can be volatile and can perform differently than developed markets. In this article, we provide a longer historical perspective on the performance of emerging markets and the countries that constitute them. We also describe the emerging markets opportunity set and how it has evolved in recent years.
WE BELIEVE that our Eighth Core Portfolio investment strategy provides the answers to the previously mentioned issues and offers a truly balanced approach to investing.
Equities, bonds, real estate and commodities are four asset classes that cover the core of any asset allocation process. The Eighth Core Portfolio is based on the idea that, during any given stage of a global investment cycle, money will flow across these assets, thereby affecting their performance. Rather than time the entry into the outperformer and the exit from the underperformer the Eighth Core Portfolio invests globally across all four in equal measure thereby ensuring that it participates in the best asset class in any environment. Over the investment period a constant exposure is maintained in order to avoid any outperforming asset class becoming a drag when the market turns.
This balanced approach is designed to produce medium to long term returns which exceed those of nominal cash returns. Historical evidence shows that this strategy has had proven outperformance in various timeframes and in all environments (see Tables 1 to 3) More importantly it minimizes volatility by taking advantage of the low correlations between the individual asset classes (see Table 4).
MintKit Growth Index: A Benchmark of the Stock Market for Sprightly Growth at...MintKit Institute
The ideal of investment lies in a robust strategy for high growth at low risk. Granted, a perfect solution could never emerge in an imperfect world such as ours. Even so, certain approaches toward the objective make more sense than others.
By received wisdom, the leading benchmarks of the stock market are cogent and meaningful portraits of the action on the bourse. Sadly, though, the reality differs greatly from the mirage.
For starters, the renowned indexes track the stocks in the prime of their lives rather than the entirety of their lifespans. In the process, the yardsticks gloss over the fact that death is the way of life for all companies along with their equities. The outcome is a grossly distorted picture of the payoff for the entire throng of shareholders over the long range.
Even in the near term, the traditional benchmarks have little or no bearing on the mass of participants. For instance, many an index monitors a group of stocks according to their market caps. While this approach may befit a profile of the bourse as a whole over the short run, the unbalanced scheme has scant relevance to the thoughtful investor who is most unlikely to load up their portfolios according to the market caps of the stocks at hand.
For these and other reasons, the traditional benchmarks are unsuitable as beacons for the investing public. Instead, a worthwhile index should address the true concerns of serious investors in areas ranging from pertinent metrics to workable strategies.
An example of a fruitful scheme involves the equal weighting of stocks within a benchmark. The benefits lie in conceptual elegance as well as practical relevance for the participants. Another drawcard is the tendency of uniform weighting to deliver higher returns compared to the labored scheme based on market caps.
In seeking a trusty path, a basic step is to canvass the timeworn benchmarks in multiplex areas ranging from conceptual soundness and logical rigor to common sense and pragmatic import. The wholesome assay then leads to guidelines for designing trenchant beacons suited to investors in tending their private portfolios. The enhanced framework is showcased by the MintKit Growth Index: a model benchmark geared toward promising stocks poised for zesty growth at modest risk.
Compared to equities, bonds at first glance can appear like a throwback to your grandparent's days, but this month we take a look at how bonds may help mitigate risk, and the role they play in a well-diversified portfolio.
The last decade has been a challenge for many investors, especially those investing for the long term and retirement. Given declines in global stock markets, many investors have seen little to no real growth in their portfolios over this period. This Wealth Guide explains why investors’ portfolios may underperform in both bear and bull markets and incur substantial costs in the process. It also details the impact this chronic underperformance can have on achieving long-term financial goals.
For more free wealth management guides on portfolio performance and for expert consultation, visit SolidRockWealth.com.
Why Emerging Managers Now? - Infusion Global Partners WhitepaperAndrei Filippov
Traditional asset classes appear to offer uninspiring beta returns at present, and recent years’ hedge fund returns have disappointed both in magnitude and diversification benefits, likely reflecting capacity pressures associated with the concentration of AUM and inflows with larger funds. We argue that, by contrast, Emerging hedge funds offer a rich opportunity set with far fewer capacity issues where skilled managers with concrete competitive advantages in less efficient, smaller capitalization market segments can generate better, more sustainable and less correlated excess returns. Emerging managers do involve more investment and operational risk than larger peers; to that challenge we offer some suggestions on a thoughtful and rigorous approach to constructing an Emerging Managers allocation and balancing effective due diligence with scalability.
The portfolio’s pro-cyclical bias was beneficial as we continued to see a shift in favor of cyclical stocks over defensive sectors. Over the past few years, we have seen a significant expansion in the universe of companies with the ability and willingness to pay a dividend. Given the speed with which stocks have advanced and the introduction of increased interest-rate volatility, I would describe my outlook for equities as cautious for the short term.
Jeff Pesta • LPL Financial
- Is it time to retire your strategy, manager, fund, or ETF? by Dave Moenning
- Dollar strength has uncertain implications
- The Anchored Momentum Indicator by Ron Rowland
- Converting positive feedback into new business (Steve Molesky, Kalos Capital Inc.)
Securities Firms and Investment Banks.docxjeffreye3
Securities Firms and Investment Banks
Securities Firms and Investment Banks (IBs)
Investment banks (IBs) help corporations and governments raise capital through debt and equity security issues in the primary market
Underwriting is assisting in issuing new securities
IBs also advise on mergers and acquisitions (M&As) and corporate restructuring
Securities firms assist in the trading of securities in secondary markets
Broker-dealers assist in the trading of existing securities
2
Investment bankers assist borrowers in raising capital in debt and equity markets and provide advice about mergers and acquisitions, corporate restructuring and general assistance in finance. Bankers also provide many creative over the counter derivative products. Securities firms provide brokerage and market making services. The investment banking and securities industries are complementary and many firms provide a broad range of services. Some specialized entities with advantages in certain market niches remain less diversified. The industry underwent tremendous consolidation in the last decade due to increasing scale and scope economies and the need for greater capital. The face of the industry was changed forever during the financial crisis of 2007-2008 with forced buyouts of Merrill-Lynch and Bear-Stearns, failure of Lehman Brothers and Goldman-Sachs and Morgan Stanley becoming commercial banks. Nevertheless, working for many of these firms is often considered the penultimate finance career, with prestige and remuneration to match. With industry profits down, firms on the Street are having a difficult time maintaining their large salaries and bonuses. A very significant portion of profits are paid out in the form of remuneration to executives. The chapter presents an overview of the size of the industry and the general strategies of the participants, major activities, primary assets and liabilities on the balance sheet, recent in the news events concerning breaches of ethics and the trend toward globalization.
Size, Structure and Composition of Industry
The size of the industry is usually measured by the equity capital of firms rather than total asset size
Equity capital in the industry in 2015 was $235 billion
The number of firms in the industry changed due to economies of scale and scope, losses with the economy, scandals at some firms, and regulations that allowed both inter- and intra-industry mergers
5,248 firms in 1980
9,515 firms in 1987
6,016 firms in 2006
4,115 firms in 2016
As with commercial banks, consolidation has largely occurred through mergers and acquisitions
.
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What website can I sell pi coins securely.DOT TECH
Currently there are no website or exchange that allow buying or selling of pi coins..
But you can still easily sell pi coins, by reselling it to exchanges/crypto whales interested in holding thousands of pi coins before the mainnet launch.
Who is a pi merchant?
A pi merchant is someone who buys pi coins from miners and resell to these crypto whales and holders of pi..
This is because pi network is not doing any pre-sale. The only way exchanges can get pi is by buying from miners and pi merchants stands in between the miners and the exchanges.
How can I sell my pi coins?
Selling pi coins is really easy, but first you need to migrate to mainnet wallet before you can do that. I will leave the telegram contact of my personal pi merchant to trade with.
Tele-gram.
@Pi_vendor_247
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when will pi network coin be available on crypto exchange.DOT TECH
There is no set date for when Pi coins will enter the market.
However, the developers are working hard to get them released as soon as possible.
Once they are available, users will be able to exchange other cryptocurrencies for Pi coins on designated exchanges.
But for now the only way to sell your pi coins is through verified pi vendor.
Here is the telegram contact of my personal pi vendor
@Pi_vendor_247
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how to sell pi coins at high rate quickly.DOT TECH
Where can I sell my pi coins at a high rate.
Pi is not launched yet on any exchange. But one can easily sell his or her pi coins to investors who want to hold pi till mainnet launch.
This means crypto whales want to hold pi. And you can get a good rate for selling pi to them. I will leave the telegram contact of my personal pi vendor below.
A vendor is someone who buys from a miner and resell it to a holder or crypto whale.
Here is the telegram contact of my vendor:
@Pi_vendor_247
1. Can Small Cap Stocks Weather the Storm?
Apr 27, 2020 With recession concerns intensifying in the wake of the COVID-19 pandemic, investors
may be wondering whether small cap stocks are poised to struggle. Are small companies
more vulnerable now than they have been during other periods of economic distress?
And what are the implications for the size premium?
Even if the economy has entered a recession, it does not necessarily follow that small cap
stocks should underperform. Why? Current market prices already reflect expectations
about future cash flows, including any impact of an economic downturn. So even if the
effects of a recession are more heavily borne by smaller companies, small cap stocks can
still deliver higher expected returns.
Turning to the data, the first question we want to answer is whether small cap companies
were displaying any unusual trends leading into the current crisis. If the financial
characteristics of small cap firms in recent years have been in line with long-term
averages, we can use historical data to help us understand the potential range of
outcomes going forward.
One common measure of a company’s relative strength is its leverage, or the relative
value of its debt. A company whose financial standing has deteriorated during an
economic downturn may experience rising leverage that is less sustainable over a long
period. When measured using total debt scaled by total assets (Panel A of Exhibit 1),
aggregate leverage rates for US small caps have actually been similar to those for US
large caps, and relatively stable through time. Another conventional measure of leverage
is interest expense scaled by EBITDA, a way to assess companies’ ability to pay their
debt through earnings. As illustrated in Panel B of Exhibit 1, US small caps appear more
highly levered than US large caps, but their leverage has remained in line with historical
trends.
Please see the end of this document for important disclosures.
2. Exhibit 1
Nothing to See Here
Aggregate leverage
ratios for US stocks,
1/1975–12/2019
Past performance, including hypothetical performance, is no guarantee of future results.
Source: Dimensional, using CRSP and Compustat. Characteristics evaluated for eligible US stocks, excluding financials,
each July. Debt is current liabilities plus long-term debt plus other noncurrent liabilities (including deferred taxes,
investment tax credit, and minority interest). EBITDA is earnings before interest, taxes, depreciation, and amortization.
Large and small cap are defined as approximately the top 92% and bottom 8% of the market capitalization, respectively.
Real estate investment trusts (REITs), tracking stocks, and investment companies are excluded from the universe.
Another characteristic worth assessing is the proportion of companies with negative
earnings. A company with negative earnings going into a recession may face worse odds
of persevering through the downturn. Recently, about 25% of the US small cap market
reported negative earnings, compared with about 5% of the US large cap market.
However, as the historical data in Exhibit 2 illustrate, this is not a particularly new
development. The current proportion of US small caps with negative earnings is in line
with the norm over the past several decades, both in absolute terms and relative to US
large caps.
2 Dimensional Fund Advisors
Please see the end of this document for important disclosures.
3. Exhibit 2
In Line
Percentage of US stock
market capitalization
with negative earnings,
1975–2019
Past performance, including hypothetical performance, is no guarantee of future results.
Source: Dimensional, using CRSP and Compustat. Earnings are defined as net income before extraordinary items.
Characteristics evaluated for eligible US stocks at the end of each July. Large and small cap are defined as approximately
the top 92% and bottom 8% of the market capitalization, respectively. REITs, tracking stocks, and investment companies
are excluded from the universe.
These data counter the notion that small caps had become particularly vulnerable before
the current economic downturn. Therefore, we can use long-run historical data to inform
expectations for small cap firms in this environment. For example, historical data on
stock delistings suggest that, on average, the stocks of small cap firms tend to be
delisted for “bad” reasons (such as liquidations, bankruptcies, or inability to meet
exchange listing criteria) more frequently than large cap stocks. From 1927 to 2019, the
average annual rate of bad delistings for US small cap stocks was about 2.7%, more than
six times the rate for US large caps (0.4%). As Exhibit 3 illustrates, the rate of bad
delistings among US small caps has been higher around economic recessions.
3 Dimensional Fund Advisors
Please see the end of this document for important disclosures.
4. Exhibit 3
Under Pressure
Rolling 12-month
average monthly bad
delisting rate for US
small cap stocks,
12/1927–12/2019
Past performance, including hypothetical performance, is no guarantee of future results.
Source: Dimensional, using CRSP and Compustat. Shaded regions indicate months falling during recessions as
designated by the National Bureau of Economic Research (NBER). Small caps are defined as approximately the bottom 8%
of the market capitalization, rebalanced annually at the end of each June. The monthly delisting rate of a month between
July of Year T and June of Year T+1 is the number of delisting in the month, divided by the number of names in the small
cap universe in July of Year T. The one-year rolling delisting rate is computed as the sum of the monthly delisting rates
over 12 months. Bad delisting events are identified with those with the first digit of the delisting code four, five, or seven,
which captures liquidations, delisting by the exchanges, and delisting by the SEC. A firm can be delisted by the exchanges
for various reasons including bankruptcies and stock prices falling below the minimum requirement. The detailed
description of delisting code is available at: crsp.org/products/documentation/data-definitions-d#delisting-code.
The relevant question for investors is whether this pattern will impact the future
performance of small cap stocks. It’s important to remember that even if small companies
are going “bust” more frequently than larger companies, that doesn’t necessarily imply
that returns for all small companies will be lower. Rather, it is sensible to believe that the
expected return for small cap stocks as an asset class compensates for the possibility that
some individual companies may go out of business.
To assess this, we plot the annual returns for the Fama/French US size factor (which
shows how small cap stocks have performed relative to large cap stocks) against the bad
delisting rate for US small cap stocks in Exhibit 4. There has been no relation between
the rate of delistings for US small caps and the performance of the size premium. Nine of
the 16 years in which US small cap delistings exceeded 5% were associated with a
positive size premium.
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5. Exhibit 4
Signal or Noise?
Size premium vs. bad
delistings for US small
cap stocks, 1/1927–
12/2019
Source: Dimensional, using CRSP and Compustat. Shaded regions indicate months falling during recessions as
designated by the National Bureau of Economic Research (NBER). Small caps are defined as approximately the bottom 8%
of the market capitalization, rebalanced annually at the end of each June. The monthly delisting rate of a month between
July of Year T and June of Year T+1 is the number of delisting in the month, divided by the number of names in the small
cap universe in July of Year T. The annual delisting rate is computed as the sum of monthly delisting rates over each
calendar year. Bad delisting events are identified with those with the first digit of the delisting code four, five, or seven,
which captures liquidations, delisting by the exchanges, and delisting by the SEC. A firm can be delisted by the exchanges
for various reasons including bankruptcies and stock prices falling below the minimum requirement. The detailed
description of delisting code is available at: crsp.org/products/documentation/data-definitions-d#delisting-code. Size
premium data provided by Ken French, available at mba.tuck.dartmouth.edu/pages/faculty/ken.french/
data_library.html. Eugene Fama and Ken French are members of the Board of Directors of the general partner of, and
provide consulting services to, Dimensional Fund Advisors LP.
Even during volatile times, markets continue to function, connecting willing buyers and
sellers. Market prices quickly incorporate new information and reflect the aggregate
expectations of buyers and sellers—including information about the financial health of
small cap companies and the impact that coronavirus developments might have on their
future performance.
Investors can put themselves in a better position to pursue their financial goals by
investing in a broadly diversified portfolio that includes small cap stocks. Diversification
can help reduce unnecessary risks associated with the performance of specific
companies or industries as well as increase the reliability of outcomes.1
1. See Dai, Wei. 2016. “How Diversification Impacts the Reliability of Outcomes.” Dimensional Fund Advisors white paper, November
2016.
GLOSSARY
Small Cap: Refers to stocks with a relatively small market capitalization.
Large Cap: Refers to a company with a relatively large market capitalization.
Market Capitalization: The total market value of a company’s outstanding shares, computed as price times shares outstanding.
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6. Size premium: The return difference between small capitalization stocks and large capitalization stocks.
Leverage: Using borrowed money to increase the potential return of an investment.
Delisting: The removal of a listed security from a stock exchange.
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