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Investing Research Articles

2965 Research Articles

Comparing and Contrasting Gold and Bitcoin

Are gold and bitcoin similar assets? In his December 2020 paper entitled “Bitcoin is Exactly Like Gold Except When it Isn’t”, Claude Erb compares and contrasts the following aspects of gold and bitcoin: Inflation hedge – how well an asset tracks some measure of inflation/purchasing power. Store of value – the ability of an asset… Keep Reading

Commercial and Industrial Credit as a Stock Market Driver

Does commercial and industrial (C&I) credit fuel business growth and thereby drive the stock market? To investigate, we relate changes in credit standards from the Federal Reserve Board’s quarterly Senior Loan Officer Opinion Survey on Bank Lending Practices to future U.S. stock market returns. Presumably, loosening (tightening) of credit standards is good (bad) for stocks. The… Keep Reading

Remaking Value Investing

Value investing performance over the past two decades is poor. Is this underperformance a temporary consequence of an unusual macro environment, or a reflection of permanent economic/equity market changes. In their February 2021 paper entitled “Value Investing: Requiem, Rebirth or Reincarnation?”, Bradford Cornell and Aswath Damodaran survey the history and alternative approaches to value investing,… Keep Reading

Money Velocity and the Stock Market

Regarding “Money Supply (M2) and the Stock Market”, a subscriber responded: “I’ve always thought…that both M2 and velocity were needed. If there’s more money, but it is not circulating, then it doesn’t have a chance to have much impact. That’s the situation we have right now for the most part.” The Federal Reserve Bank of St. Louis… Keep Reading

Weekly Summary of Research Findings: 2/22/21 – 2/26/21

Below is a weekly summary of our research findings for 2/22/21 through 2/26/21. These summaries give you a quick snapshot of our content the past week so that you can quickly decide what’s relevant to your investing needs. Subscribers: To receive these weekly digests via email, click here to sign up for our mailing list.

Money Supply (M1) and the Stock Market

A reader commented: “M2 cannot be an accurate money supply measure because it includes non-cash investments such as money market mutual funds. When the stock market corrects and people are exchanging stocks for say, money market mutual fund shares, the M2 figure will actually increase. The money supply is not literally increasing in such cases… Keep Reading

Money Supply (M2) and the Stock Market

Some investing experts cite change in money supply as a potentially important driver of future stock market behavior. When the money supply grows (shrinks), they theorize, nominal asset prices tend to go up (down). Or conversely, money supply growth drives inflation, thereby elevating discount rates and depressing equity valuations. One measure of money supply is… Keep Reading

Update of a Lumber/Gold Risk-on/Risk-off Strategy

A subscriber asked for a performance comparison between 50% Simple Asset Class ETF Value Strategy (SACEVS) Best Value-50% Simple Asset Class ETF Momentum Strategy (SACEMS) equal-weighted top two (EW Top 2), rebalanced monthly (SACEVS-SACEMS 50-50), and a strategy that is each week in stocks or bonds according to whether the return on lumber is greater… Keep Reading

Ascendance of Automated ETF Allocation Models

Investors seeking low-cost, automated, tax-efficient and potentially alpha-generating solutions increasingly follow model portfolios of exchange-traded funds (ETF). Is there a top-down way to characterize those models? In their November 2020 paper entitled “Using Data Science to Identify ETF Model Followers”, Ananth Madhavan and Aleksander Sobczyk apply machine learning methods and cluster analysis to identify all… Keep Reading

Diversifying across Growth/Inflation States of the Economy

Can diversification across economic states improve portfolio performance? In their November 2020 paper entitled “Investing Through a Macro Factor Lens”, Harald Lohre, Robert Hixon, Jay Raol, Alexander Swade, Hua Tao and Scott Wolle study interactions between three economic “factors” (growth, defensive/U.S. Treasuries and inflation) and portfolio building blocks (asset classes and conventional factor portfolios). Their… Keep Reading