The latest SPIVA Scorecard on the U.S. fund industry was released this week. Only 8% of large-cap, 5% of mid-cap, and 7% of small-cap fund managers beat their benchmarks over the past 15 years.

That’s pitiful. It shouldn’t be a surprise either.

Common sense says there are too many mutual funds to manage and not enough great money managers to go around. Just like anything else that requires skill, there’s a limited number of “best” people. The rest are average, mediocre, or worse. Continue Reading…

Debt can be very helpful or hurtful. In business, debt is called leverage for a reason. It can grow a business and increase earnings. But misusing debt can turn that leverage into an anchor.

James Montier at GMO points out the misuse of debt to fund share buybacks (along with a few other things) and how it relates to the current market prices, in his latest paper Six Impossible Things Before Breakfast.

The debt for buybacks issue has been pointed out numerous times before, but it’s been largely overlooked or ignored. Buying back shares is a short term fix to show “growing” earnings per share. If you’re just looking at this on the surface, earnings per share is higher. Everything’s great, move along. Continue Reading…

I can google anything and get a list of results in less than a second. If I click one of those links and the site takes too long to load, I’ll likely leave before I see it. How long is too long? Two seconds.

Let that sink in.

As a site owner, this will drive you crazy trying to optimize for speed. But just based on the stats, it’s insane. Most people will not wait an extra second or two for results they want. Continue Reading…