Osbon on the Money

The answer is yes. It will go up or down, and tomorrow night we can tell you which. As of August 17, the Dow had risen 8 of the last 11 days. Both the Dow and S&P 500 were up 6 weeks in a row, and the NASDAQ 5 weeks in a row.  What do these trends mean for the…

Here’s a headline you’re not ever likely to see: “Good news breaks out!” The media always prefers a crisis.  Nonetheless, behind the relentless drumbeat of negative news coverage (Europe! Deficits! Slowdown!), there is unmistakably good market news across the board so far in 2012.  Let’s look at a few facts.

First the “flash crash.” Then the Facebook trading debacle. Now, Knight Capital shoots itself, accidentally and critically. What’s going wrong with the basic market function of an orderly match between buyers and sellers?  Let’s look closer look inside the maelstrom that is the cutting edge of modern trading for the answer, and perhaps some hidden good news for long term investors.

Investors can sometimes feel like they are facing market opponents that hold all the advantages, be it fantastically rich hedge funds, privileged insiders, rigged markets, or bewildering news events.  How can investors thrive in the face of such overwhelming odds stacked against them?  I suggest investment jujitsu – using your opponent’s strength to your benefit.  Here’s how to practice it.

Both practical experience and academic research show that active managers, on average, fight a losing battle when trying to beat indexes in their respective asset classes. Even managers who beat their benchmark for a year or two are not likely to continue for extended periods. Active managers come to the battle well armed – able to exploit limitless research, fundamental and…

On the tennis court, the top players dominate. At Wimbledon this past week, no singles player seeded below #8 made it past the quarterfinals. Roger Federer won his seventh title and Serena Williams won her fifth. We expect top players to win their matches and they generally do.  The cream just rises to the top through superior physical talent, court…

If you are going to build a house, use quality materials.  Then it will last for a long time.  The same philosophy applies to portfolio construction: use quality index ETFs (exchange traded funds).  How can you pick the sturdiest oak, steel, and glass from the detritus of 1000+ ETFs available today?  At Osbon Capital, we start with four tests, which…

JP Morgan’s startling trading loss of $2-5 billion is a good reminder to investors to watch out for hidden problems in their own portfolios – unknowns that should have been known. After the fact, it is easy to see how JPM went astray, but is it possible to see – or avert – one’s own problems ahead of time? Yes, and here’s what to look for.

If I was asked to present the three or four most important ideas in investing and could only bring one sheet of paper with me, it would be no contest. I’d bring the Andex Chart from Morningstar. I’m not sure how they managed to get so much market history onto one sheet of paper, but I’m glad they did.  In…