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Money For Nothing? - September 2019 ViewPoints
In a “normal” world a borrower pays a lender for the use of money in the form of interest. So, what are we to make of the fact that something like 17 trillion dollars or 30% of the world’s investment grade debt now has negative interest rates, meaning lenders pay borrowers to take money. Is this because borrowers expect deflation, which would make the loan worth less when it is paid off than it is worth today? Is the risk of default zero so lenders don’t have to be compensated for any risk? Maybe for the German government, but also Ireland, Portugal and Slovakia? Or, is there so much cash around that it has no economic value, i.e. a borrower can’t expect to do anything productive with it so he has to be paid to take the money?
The State of the World - June 2019 ViewPoints
The world is getting better at a rate of change never seen before in human history, but almost nobody seems to know it. The question is why and how can we benefit from other people’s pessimism.
Investment or Investment Product - September 2018 ViewPoints
Today, most investment advisors manage assets using products rather than in the traditional stock and bond approach we employ.  Does it work?  It always works, because when one product fails there is always another one with a better past record to replace it.  The promise of a better way to buy stocks and bonds (or whatever else can be sold) isn’t new.  It’s been going on for decades.  Today’s iteration comes through the halo of “index” or “passive” investing.  While “index” investing should be a boon for investors by making markets accessible at virtually no cost, somehow these benefits are being perverted by the never ending chase for assets and fees. What today can be qualified as “passive” investing through ETFs is the latest iteration of Wall Street’s game.   History demonstrates that no matter how great a product sounds on paper, our core buy and hold philosophy has withstood decades of product innovation, only to come out looking even better on the other side. Will this time be the same?  Read more...
Rational vs Irrational Investing - June 2018 ViewPoints
It is estimated that 90% of US equity trading is irrational, having nothing to do with the fundamentals of companies or investor’s judgement
.  On any given day, about 50% of trading is computerized high frequency trading, conducted so fast that by necessity it is done from computer to computer without human hands, much less rational forethought.  Another 40% is executed by index traders, where baskets of securities are traded based solely as a bet on the overall direction of the market.  That leaves a mere 10% of trading that is the result of active investors attempting to rationally value securities.  Little wonder that what happens to the price of a stock on any given day appears to be inexplicable.  The questions then are:  What does this mean for the market?  Are active managers more or less likely to beat the market?   How will this all end?   Read more...
Value Investing - March 2018 ViewPoints
Ben Graham, the father of value investing described this simple formula for investment success:  “Buy cheap and sell dear.”  Would anyone do it differently? Amazingly, yes.  It appears that most people do the exact opposite.  The fact is that the volume of stock purchases increases dramatically as stock prices go up and decrease as they decline. Clearly the stock market is dominated by momentum investors who buy what has gone up and sell what has gone down, the exact opposite of what Ben Graham recommended and logic would dictate. But why?  Compass explores how we take advantage of the opportunities created by this dichotomy.  Read more...
Value Investing - The Year of Surprises
Last year at this time the pundits thought they had a pretty good idea of what 2017 would bring. The experts were all wrong. If there is a lesson to be learned from 2017, it is that while markets are unpredictable, following a disciplined asset allocation and value oriented approach to investing helps our clients achieve and exceed their financial goals.  Read more...
The FAANG Stock - September 2017 ViewPoints

In case you missed it, FAANG refers to the five wildly popular stocks that have been leading the market: Facebook, Amazon, Apple, Netflix and Google (renamed Alphabet). Of course being contrarians, we have an automatic revulsion to whatever is in vogue, and nothing could be more popular than the big five FAANG stocks that together represent the new economy and a huge percentage of the recent market advance.  FAANG stocks are obviously growing like crazy and can do no wrong. The problem is that what is obvious invariably becomes overpriced, and great companies become bad investments. 
Twenty Years - June 2017 ViewPoints
It has been twenty years since we started Compass. The timing couldn’t have been much better. The stock market’s last major correction was in 1990 and stood at an amazingly high 10,000. It would be two more years and over 6,000 more Dow points before the market began to fall in 2000. Declining interest rates and a soaring stock market meant that it was hard to go wrong, but we trailed the market averages for the first two years. Something that as a young company was hard to explain, but would later benefit our clients in the brutal bear markets of 2000, 2001 and 2002.  What we learned early in the history of Compass was that there are times when a value investment style underperforms the market, and the bull market leading up to the 2000 crash was one of them.  Read more...