Seeking Alpha

Do Rising Rates Spell Doom For REITs?

As we have discussed many times, much of the conventional wisdom on investing is simply wrong. For our purposes, we can define conventional wisdom as those ideas that are so commonly accepted that they go unquestioned. Today, we’ll look at the idea that rising interest rates would doom returns to real estate investments, specifically the …Read More.

The Long And Short Of The Low-Volatility Anomaly

As far back as the early 1970s, research has shown that the lowest volatility stocks have provided better returns than the highest volatility stocks. These findings run counter to economic theory, resulting in the low-volatility anomaly. The academic research, combined with the 2008 bear market, has led to low-volatility strategies becoming a darling of investors. …Read More.

Does Taking Corporate Credit Risk Add Value?

Earlier this week, we looked at whether adding credit risk in the form of lower investment-grade municipal bonds was an efficient approach to improving returns. The evidence is clear that this isn’t the case. In fact, taking more credit risk resulted in worse relative performance. Today, we’ll apply the same approach to determine whether adding …Read More.

The Role Of Credit Risk In Exchange-Traded Notes

The financial crisis of 2008 underscored the role that credit risk plays in many investments. And while counterparty risk has been in the spotlight with such derivatives as credit default swaps, comparatively little attention is paid to its impact on exchange-traded notes (ETNs), a type of tracking product. ETNs are relatively new — but rapidly …Read More.

Do Day Traders Evidence Skill?

Professors of finance Brad Barber and Terrance Odean have done extensive research on the performance and habits of individual investors. Among their findings is that, on average, individual investors lose money from trading – and not all of the losses can be explained by trading costs. They’ve found that individual investors can have perverse security …Read More.

Does Private Equity Deliver Alpha

The term private equity – PE – is used to describe various types of privately placed (non-publicly traded) investments. It has grown tremendously over the past 30 years – thanks largely to America’s pension funds as they search for alternatives to public equity markets that might help them meet their return objectives. Frank Jian Fan, …Read More.

Has The Realized Equity Premium Been Shrinking?

Tying up our two-part series¬†on premiums, today we’ll explore the equity premium. Claude Erb has done a series of papers in which he examines the various premiums – size, value, momentum, and beta – and found that there’s a demonstrable trend in each case of the premiums shrinking in terms of realized returns. His April …Read More.