Category Archives: Academic Finance

A Bond Manager Thinks about the Equity Premium

One of the things that annoys me about the concept of the equity premium is that it is an academic creation that does not grasp the structures of the markets.  Send the academics to be bond and equity portfolio managers for a time, and maybe we would get a better theory than Modern Portfolio Theory […]

An Alternative to the Efficient Markets Hypothesis

I read an article today, The Fallibility of the Efficient Market Theory: A New Paradigm.   Good article, made me look through a major article cited: An Institutional Theory of Momentum and Reversal. The former article explains in basic terms what the authors have illustrated.  The latter article, provides all of the complex math.  I get 50%+ of […]

An Idea for When the Market is High

Last night I was at the Towson University International Markets Summit.  I’m grateful to the students for inviting me, as it is an honor.  During the presentation, I mentioned the book “Accounting for Value” by Stephen Penman.  I reviewed the book two years ago.  A great book, and one that should lead readers to modify their […]

On Approximate Valuation Methods

The growth of corporations is always constrained by something.  The trick is figuring out what the “something” is.  Tonight, I am here to simplify it for you. Financial businesses that are regulated We value these via book value or tangible book value.  Capital levels constrain business growth, so look at the return on equity to […]

On Fat Tails

I’m reading an investment book that is arguing for market timing.  I’m not impressed with the line of argumentation so far.  I just finished a chapter where the authors pointed out that security price movements are more volatile that the normal distribution would admit. This is a well known result, or at least it should […]

A New Look at Endowment Investing

I’ve written at least two significant pieces on endowment investing: Alternative Investments, Illiquidity, and Endowment Management The Forever Fund Oh, toss in one more: Managing Illiquid Assets Recently, Cathleen M. Rittereiser, Founder of Uncorrelated, LLC, reached out to me to show me her whitepaper on endowment investing, The Portfolio Whiteboard Project.  This was partially in […]