April 21, 2009

Toles on Wall Street

The guy just keeps the good stuff coming. From last week...

Toles on Financial Services Dog

Apr 21, 2009 5:21:00 AM | Wall Street

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Hussman on Bear-Market Rallies Here's some good stuff from the always-worth-reading John Hussman: Bear market rallies from oversold conditions are not predictable, in the sense that a market that has endured a steep selloff can easily continue lower another 10%-15% or more. Still, there has historically been some tendency –- on average –- for the market to rally off of deeply oversold conditions. The problem is that those generally positive averages mask an enormous amount of variation, so the actual return/risk ratio isn't nearly as attractive as one might imagine. With the warning that the following figures do mask a very large amount of...
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S&P Findings on Active Management This isn't surprising, but it's important (emphasis added in bold): Passively managed funds outperformed actively managed funds across all categories during the past five years according to [research from] Standard & Poor's Index Services, which was released today. Between 2004 and 2008, the S&P 500 stock index outperformed 71.09% of actively managed large-cap funds, according to the year-end 2008 report from the New York-based research firm. In addition, the S&P MidCap 400 Index outperformed 75.9% of mid-cap funds and the S&P SmallCap 600 Index outperformed 85.5% of small-cap funds. "The belief that bear markets strongly favor active management is a...