Dollar Weighted Returns and Market Timing

Retail investors are generally poor market timers. As such, the return they actually earn (what we call dollar weighted, or asset weighted, returns) is generally much lower then the return a fund manager otherwise provides (what we would call compounded buy and hold returns). Check out this article (WSJ) for more on the return gap across different fund types and different levels of market volatility. 

Zero Day Options

 The fastest growing area in the option market  is so-called "Zero Day Options," which expire the same day they are issued. These are attractive to day traders and others looking to benefit from a quick movement in a stock's price. Surprisingly, their fast growth means that these options now represent almost 40 percent of daily option volume. See more information here (Bloomberg).

Tesla Shorts Finally Win

Over the past few years, Tesla has had a large short interest, yet the stock kept rising. However, in 2022, fortunes changed, and Tesla dropped over 60 percent, bringing a large return to the bears. See article here, Yahoo!.

Single Stock ETFs

The primary purpose of ETFs is to create easily traded baskets of underlying securities. So, why would single stock ETFs exist since investors could simply invest in the underlying security directly? The answer is that single stock ETFs are generally either levered or inverse funds. See article here, CNBC.

Index Funds Win Again

For the 12th straight year, index funds have outperformed a majority of actively managed funds. In fact, in 2021, 85% of US large-cap equity managers underperformed the S&P500. Interestingly, at the stock level, only 22% of the stocks in the S&P500 outperformed the index over the last 20 years, suggesting that a small number of stocks drive the majority of returns. See article here, Yahoo!.

Reverse Stock Split

 GE experienced some business issues that caused a significant drop in its stock price. While it has recovered some, the share price is still well below that of its competitors. Even though market cap is the more relevant measure, investors often focus on the share price. To be more comparable, GE undertook a reverse stock split. See article here, yahoo!

Supply and Demand

 Demand is outpacing supply, causing prices to rise and businesses to seek out ways to increase production. Check out this article (yahoo!).