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📑 Research Notes for 2021-03-08
This week, we look at comparisons to 1999 and 2008, the recovery in the oil market, and how simple trading rules trump fancy models.
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4 Ways Today's Stock Market Resembles That of the Late 1990s.
For those of us who followed the U.S. stock market closely during the 1990s, it’s hard to avoid comparing it with the 2021 market. Many of today’s investment stories read as if they were ripped from last generation’s headlines.
The Opposite of 2008.
It’s just like 2008, except … the opposite. In 2008, the US housing market – together with a Fed that thought the subprime crisis was “contained” – delivered the mother of all deflationary shocks to the global economy. In 2021, the US housing market – together with a Fed that thinks inflationary pressures are “transitory” – risks delivering the mother of all inflationary shocks.
How the Oil Market Bounced Back From a Year of Crisis.
(Wall Street Journal)
Oil prices have staged a rapid recovery since the biggest crisis to strike the energy industry in decades. The Organization of the Petroleum Exporting Countries and its allies stepped in last spring to backstop the market by slashing production in the teeth of a collapse in crude prices. This week, the cartel is expected to reach a deal on unwinding some of those cuts. Here is why U.S. crude prices have roared back above $60 a barrel from a low of minus $37.63 a barrel last April.
Simple Trading Rules Outperform Fancy Portfolio Optimization. Here’s Why.
The Markowitz Mean-Variance efficient portfolio, and its mass adoption cousin the Capital Asset Pricing Model, radically changed the subject of finance replacing hunches and heuristics with beautiful science. Unfortunately, they make for terrible trading strategies.
Curated by Joseph Lu, CFA®
Joseph has over a decade of experience as an investment professional, primarily in quantitative analysis and portfolio management roles. He is the founder and managing director of Conscious Capital Advisors and a CFA® Charterholder. The CFA charter is a globally respected, graduate-level investment credential by the CFA Institute, a global association of more than 90,000 investment professionals working in over 133 countries.
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