Cost Matters

Research continues to show that low fees are the most important driver of a fund's future alpha. Vanguard has a nice piece describing their findings. Click here to see the article.

Berkshire Shares Hit Record

What is the highest priced stock traded in the United States? It is the A-class stock of Warren Buffett's company Berkshire Hathaway (BRK-A). The shares recently touched a record high of over $300,000 per share. Does this mean it is the highest valued company? The answer is no, as that distinction belongs to Apple, with a market cap of $906 Billion (vs. Berkshire's $493 Billion). The main reason for this difference is that Buffet has not split Berkshire's stock. See related article here, Reuters.

GE Hits Fibonacci Support

Traders who rely on technicals often try to identify support (and resistance) levels for stocks. Such levels may be based on moving averages or historical lows (and highs), but another common approach is using Fibonacci numbers (i.e., the "golden ratio"). According to this process, a key support level is a 61.8% retracement from a high price, which GE is approaching. See article here, MarketWatch.

Understanding the VIX

The number of volatility linked investment products has grown significantly since the "great recession." Many of these products are linked to the VIX, or volatility index. Unfortunately, many investors have a limited understanding of what the VIX actually is. Fortunately, in a recent article, the WSJ attempted to provide a brief explanation.

Mutual Fund Performance Persistence

Do high performing mutual funds continue to perform well? This is one of the biggest questions among both investors and researchers. Recently, the WSJ (see article here) studied how funds with five-star Morningstar ratings perform in the years following their high ratings. The results suggest that performance does not persist.

European Derivatives Market

The European Securities and Markets Authority (ESMA) just reported that the European derivatives market has an outstanding notional value of over 450 million euros, representing 33 million open positions. See article here, Luxembourg Post.

Shorting Treasuries

Investors have been expecting interest rates to rise. While this has yet to take place, more traders are taking positions consistent with this view. Potential budget deficits and borrowing costs are also adding to the situation. In response, many investors have reduced their exposure to long-dated Treasuries, as their higher duration would cause a more negative reaction to any increase in rates. Beyond that, other traders have taken increased short positions to benefit from this potential move. See article here, Reuters.