Black Monday Revisited: Lessons From 29 Years of Market History | PIMCO Blog

Just a great article from PIMCO:

Black Monday Revisited: Lessons From 29 Years of Market History | PIMCO Blog: "It was 29 years ago this month that world equity markets experienced a meltdown that became known as Black Monday (or Black Tuesday in Asian time zones). On 19 October, the Dow Jones Industrial Average plunged 23%, its largest-ever one-day percentage decline.

As equity and bond markets fell, an anonymous bond trader sensed an opportunity. He sold a U.S. long bond (a 30-year Treasury bond yielding 8.875% and maturing in 2017) at a price of 86. Just two months earlier, the bond had been issued at par. The trader was hoping to buy it back a quarter of a point lower.

Yet a minute later the bond market reversed direction and has not looked back since.

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Research: Index Funds Are Fueling Out-of-Whack CEO Pay Packages

Research: Index Funds Are Fueling Out-of-Whack CEO Pay Packages:

 "We found that when firms in an industry are more commonly owned, top managers receive pay packages that are much less performance-sensitive. In other words, these managers are rewarded less for outperforming their competitors. This difference in compensation has a sizeable effect. In industries with little common ownership, executive pay is about 50% more responsive to changes in their own firm’s shareholder wealth than in industries with high common ownership.

What’s more, in industries with high common ownership, top managers receive almost twice as much pay for the good performance of their competitors as managers do in industries with low common ownership. This effect is even more pronounced for CEOs alone. Essentially, CEOs are rewarded more for the good performance of their competitors than they are for the performance of the company they run.

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Shaking Up Boards Would Help Keep Corporations Honest - Hartford Courant

Shaking Up Boards Would Help Keep Corporations Honest - Hartford Courant:



While a somewhat extreme view, there is much truth in this.  Read the whole article not just this reading-bite:

 "Where do such directors come from? In U.S. companies they are typically chosen by shareholders, but in a system so rigged that it may be the closest Western analog to a Soviet election. The incumbent directors nominate all the candidates (usually themselves), severely limiting the voters' freedom of choice. Withholding votes in protest is both useless and dangerous, because it has no effect on the outcome and — if practiced by big investment firms — can even elicit retaliation from management (which has the power, for example, to decide who invests the company's pension money). Directors know that the quickest way to lose their well-paid positions is to criticize the CEO."

99% of actively managed US equity funds underperform

99% of actively managed US equity funds underperform:



Surprised only by the 99%, I expected closer to 95-97%....wow...

"Amin Rajan, chief executive of Create Research, the consultancy, said: “These numbers are scary. Active managers need a root and branch look at their investment processes to retain their relevance in today’s surreal investment landscape.” According to the analysis, 99 per cent of actively managed US equity funds sold in Europe have failed to beat the S&P 500 over the past 10 years, while only two in every 100 global equity funds have outperformed the S&P Global 1200 since 2006. Almost 97 per cent of emerging market funds have underperformed."

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NYU professor explains how to value tech stocks

NYU professor explains how to value tech stocks: "Paint the technology sector with the same brush at your own peril, warns a finance professor.

"Older technology companies are behaving very different from the younger technology companies," said Aswath Damodaran, professor of finance at the Stern School of Business at New York Univer"



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