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    Some Assets are Hard to Ignore Guest columnist Diane Harrison looks at the world of alternatives to alternatives, including stamps, cars, farmland and more...

    Investors are always in search of that ‘fail-safe’ investment option, the one that offers the perfect hedge against whatever risk du jour poses a threat. Even though conventional wisdom suggests there is no such animal, the quest continues, and periodically one category or another finds itself leading the charge in general interest. Currently at bat in this popularity contest is the category of hard assets, a broad swath of investment options that appear to offer some protection against the general inflationary and economic fragility fears at work in the markets today. Yet most investors feel uncomfortable investing personally in specialty segments. With renewed interest in these ‘alternative alternatives,’ niche managers who can provide skilled access are creating funds that answer these specific needs. Investors can choose to own the hard assets themselves if they feel knowledgeable enough to do so, or participate through a comingled fund vehicle, or perhaps invest with a combination of both. GROWTH EQUALS STRESS Population growth and a burgeoning middle class worldwide have added increased pressure on the planet's ...

Featured Post


The Skorina Report: Another try at herding Gotham’s five-headed fund

Guest columnist Charles Skorina looks at the five-headed NYC pension system with its new leader, Scott Evans.

By Charles Skorina In July, Scott Evans reported for duty as Chief Investment Officer in New York City's Bureau of Asset Management, where he'll manage $160 billion in employee pension funds. Traditionally the city's CIO is replaced when the political wheel turns, which it did last fall. Retiring Mayor Michael Bloomberg was succeeded by William De Blasio; and Comptroller John Liu, the independently-elected custodian of the city's pension funds, was replaced by Scott Stringer. Mr. Stringer beat back a last-minute primary challenge from disgraced ...


One Ordinary Week in the Life of Climate Change


(March 24 update) We present here recent anecdotals on the subject of climate change.  It's a topic that affects many industries: insurance, real estate, energy (renewable and non-), food, water, national defense, to name a few.   Investment opportunities arise when there is a divergence of opinion, as is uniquely the case in the United States (unlike the other nations on Earth) on the subject of climate change.  There's an argument to be made that investors who accept the settled science ...

Guest Posts


The Skorina Report: Divestment vs. Fiduciary Duty Whose Money is it?
Guest columnist Charles Skorina takes a look at investment divestment..

What the divestment debate comes down to is how boards define their fiduciary duty. [Spoiler: We don't think divestment is a good idea] We're recruiters in the business of finding chief investment officers and senior asset managers, and our readers worry more about investing than divesting.  So you may be forgiven if you overlooked Global Divestment Day on Friday, February 13. It was spearheaded by Bill McKibben's 350.org/Fossil Free group with support from many other Green enthusiasts.  Mr. McKibben is the Pied Piper ...


Indexes

Authorities Offer Revisionism About Flash Crash
Authorities now claim that the shenanigans that set off the flash crash of May 2010 were the work of Navinder Singh Sarao. Does this mean Waddell & Reed were unjustly maligned? Almost certainly.

So now there’s a new theory about the “flash crash” on 2010. I thought we had this one straightened out. It has passed out of the realm of journalists, into that of historians. It was Waddell & Reed. Right? What puts it very much into the former realm, though, is the arrest of Navinder Singh Sarao in London, and charges by the Commodity Futures Trading Commission against both Sarao individually and his firm, Nav Sarao Futures Ltd. The CFTC complaint, filed with the U.S. District Court for the Northern District of Illinois ...

Venture capital

Tax & Election Seasons Create Alternative Altercations in the US
As a general rule, politicians [mostly] on the Democratic side benefit by raising the issue of the taxation of carried interest during campaigns and then quietly letting it die, as their donors expect, when the legislature is actually working on tax bills. It's a way of signaling who is a "populist" and who isn't.

The end of tax season and the start of Hillary Clinton’s campaign for President nearly coincided this year, and that gives rise to some thoughts of concern to alpha hunters. At one of the earliest events of her now-official campaign, the former Secretary of State denounced the use of capital gains tax rates by hedge fund managers. Specifically, at a roundtable in Monticello, Iowa on Tuesday, April 14th, she said, “And there’s something wrong when hedge fund managers pay lower tax rates than nurses or the truckers I saw on I-80 ...

Risk management

Eurelectric Speaks Up For Grushenka
Is it possible or desirable to separate "speculation" from operational hedging, so as to clear the way for industries to do the latter without the regulatory burdens that planners want to impose upon the former? Once Europe has decided that speculation is a bad thing, won't it end up pursuing the demon ways that will collapse the proposed distinction?

Sometimes I can’t help but think of a passage from The Brothers Karamazov: “It was known too that the young person had, especially of late, been given to what is called ‘speculation,’ and that she had shown marked abilities in that direction…. [S]he had for some time past, in partnership with old Karamazov, actually invested in the purchase of bad debts for a trifle, a tenth of their nominal value, and afterwards had made out of them ten times their value.” The evident condemnation of Grushenka’s entrepreneurship by her unhappy neighbors was ...

Institutional Investing

They Do It Right Down Under: Australian Institutional Funds
The hapless U.S. mutual funds Chen and Gallagher sample have a nominally positive pre fee alpha only when measured against CAPM. That disappears into the negatives when the baseline used is the Fama-French model, and deeper into the negatives when the momentum factor is added.

A new paper by two scholars affiliated with the University of New South Wales compares Australian institutional funds to U.S. mutual funds. Along the way, these two scholars illuminate the distinction between true alpha on the one hand and beta-posing-as-alpha on the other. Their bottom line: Australian institutional funds generate positive alpha, even when alpha is defined in narrow and challenging ways. U.S. mutual funds don’t. U.S. mutual funds can barely generate positive alpha when it is defined in such a way as to include the success of the simplest beta ...

Legislation/Court rulings

Aleynikov’s Trial and My Cousin Vinnie
A party seeking to employ an expert witness is supposed to let the other side know who the expert is in advance of trial. Fans of a classic Joe Pesci movie will remember that it isn't necessary to join the prosecutor in a hunting lodge.

Prosecutors keep trying to ensure that Sergey Aleynikov is treated as a criminal for allegedly attempting to convey to his new employers some computer code on which he had worked for his prior employers. The whole thing gives off a bad odor, as prosecutors seem to be fetching water for Goldman Sachs. Still, it has its amusing moments, and some of the recent amusement recalls a 1992 movie starring Joe Pesci. Most readers of AllAboutAlpha will ...

Currencies

Larry Fink Thinks ‘The Market Is Wrong’ on Greece
It is always dangerous to say (of any deep and liquid market) that the market is simply wrong in its valuations. Likewise, if you're sitting at a poker table and you don't know who the sucker is ....

By the time the talk between Maria Bartiromo and Larry Fink got underway, nearly half an hour before the opening bell April 17th in New York, the financial news was dominated (not for the first time in recent months or years) by concerns about Greece, and specifically by worries about whether Greece was near default and/or Grexit. There was a sense by Friday morning that the coming weekend would prove decisive in a crisis that has ...

Risk management

The Latest News from Italian Banking and the Dane-geld
Banca Monte dei Paschi di Siena, BMPS, the oldest bank in the world, has now admitted that its exposure to Nomura Holdings has exceeded the 25% cap set by Italy’s regulators. Faille can't think of a good alpha-winning play on this fact, but it does inspire him to re-work a Kipling poem.

Rudyard Kipling famously warned that once a nation starts “paying the Dane-geld” it will never get rid of the Dane. Those who have succeeded in an extortion racket will continue with it. This is usually taken (and was surely intended) as a caution against appeasement: the Anglo-Saxon King Aethelred bought off the Vikings with silver because he was not prepared to fight them. Even after the Danes killed the Archbishop of Canterbury in 1012 the response ...

Technology

When I Learned Truth About RadioShack
IT guys have been denigrating RadioShack, from their own perch of superiority, for a long time. The trouble is, while those IT guys were the future, RadioShack's customer base was fading into the past.

RadioShack’s final decline, the long-delayed visit from karma if you will, had a lot to do with inept financing decisions. At the end of the first decade of the 21st century RadioShack executives became obsessed with the idea that their company was undervalued. They kept fighting the market valuation, buying back their own stock with borrowed money to a degree that proved unsustainable. Hence the bankruptcy filing in February of this year, and a classic opportunity ...