Speculative Half-Cycles Tend To Be Completed Badly by John Hussman, (22 February 2016)


http://www.hussmanfunds.com/wmc/wmc160222.htm

Excerpt from the article: „Last week, the Cleveland Fed Financial Stress Index climbed to 1.92 (measured as standard deviations from the mean); a level associated with severe financial distress, and previously observed only during the 2011 market retreat, the 2008-2009 financial crisis, and the Asian crisis of 1998. This spike has been driven by widening credit spreads and other measures of systemic market-perceived risk. In 1998, a similar spike shortly preceded the collapse of Long Term Capital Management. In 2008, the spike shortly preceded the failure of Bear Stearns and Lehman Brothers. In 2011, the spike was followed by the failure and restructuring of Greek government debt… Presently, a further 40-50% collapse in the S&P 500 over the completion of this market cycle would not represent a worst-case scenario, but rather a run-of-the-mill outcome from current valuations. That prospect is coupled with an expectation of a U.S. recession, and the likelihood that Fed easing will be wholly ineffective in preventing either…. 
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Has the Index Fairy Lost Her Powers?


The Index Valuation Premium
It is accepted wisdom that the addition of a company in a major index leads to a rise in its share price and a subsequently higher valuation of the company on the stock market.

A study of the impact of S&P500 index additions and deletions, between 1990 and 2005, found average abnormal share price returns of +8.8% for additions and -15.1% for deletions¹. Another study focusing on the valuation of premium of S&P500 constituents, found that, in 1997, measured in terms of Tobin’s q ratio, S&P500 firms enjoyed a whopping 40% higher valuation than equivalent companies not in the index². As recently as June 2015, a study by S&P capital IQ, comparing stocks in the Russell2000 index against non-Russell2000 index members found, when comparing the Price/book valuation of companies, a large 62% premium valuation for index members versus non-index members³. It’s as if there’s an Index Fairy whose magic wand has the power to dramatically increase (or decrease) the value of a company.
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Jiří Voda: Naší specialitou v JET Investment Management je koupené podniky postavit zpátky na nohy, tak aby si na sebe nejen zpětně vydělaly, ale byly silnými prosperujícími podniky v dlouhodobém horizontu.



Jiří Voda, CFA, v roce 2003 absolvoval Fakultu mezinárodních vztahů Vysoké školy ekonomické v Praze a od roku 2012 je také držitelem titulu CFA (Chartered Financial Analyst). Od roku 2000 působil v bankovním a investičním sektoru, nejprve v bankovní skupině UniCredit – Živnostenská banka, poté v Pioneer Investments a nakonec v Citibank, kde se zaměřoval na spolupráci s nadnárodními a velkými lokálními korporacemi. Od roku 2014 působí v české private equity skupině Jet Investment Management Igora Faita jako ředitel investičních projektů. Jiří zde vyhledává příležitosti k restrukturalizacím společností, které následně i sám aktivně řídí. V současné době je například členem představenstva ve společnostech PBS INDUSTRY a STROJÍRNY POLDI. O jeho zkušenostech ze sektoru private equity si s ním povídal Michal Stupavský, CFA.
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Game Theory Primer for Macro Investors written by Brian Singer, CFA, the key-note speaker at the CFA Society Forecasting Dinner 2016 on 16 February


This Tuesday we had a pleasure to host Brian Singer, CFA, the Partner and Head of Dynamic Allocation Strategies Team at William Blair & Company, L.L.C, as the key-note speaker at the CFA Society Forecasting Dinner 2016. His thought-provoking lecture with the title "The Macro Asset Allocation "Game" - Is Game Theory Overtaking Finance?"unequivocally confirmed once again that economics is a social science as he was stressing many themes and key words which are not the prime focus for the great majority of finance and investment professionals, such as complex adaptive systems, geopolitics, strategic negotiations, game theory or time-series cointegration. Based on Brian's lecture it is totally obvious that to become a successful economist, investor or financial advisor in the long-term perspective it is by no means enough to be a master of Excel spread sheets. On the contrary you must abound also with a solid background in history, geopolitics, sociology and international relations. In his short paper from March 2013 Brian summarizes the game theory framework applied within the investment process of his Dynamic Allocation Strategies (DAS) team. 


Enjoy the reading and let us know your comments! We wish you a nice weekend. 

https://www.williamblair.com/~/media/Downloads/Insights/DAS-Assets/Game-Theory-Primer-April-2013.pdf
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Do you like a simple P/E ratio?


If you do, then according to the valuation and corporate finance guru Aswath Damodaran you should beware in case of high net cash companies in particular. 

Read more at: http://aswathdamodaran.blogspot.cz/2015/06/debt-cash-and-pe-why-cash-is-upper-and.html?m=1 

Today we kick off a regular weekly post "Friday Article Pick for CFA Candidates and CFA Charterholders". Hope you will appreciate this initiative and become our regular readers. We will appreciate a lot your comments, thoughts and feedback below the articles. 
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24 Hours with Michal Žofaj, CFA


Employer and position: Portfolio Manager at ČSOB Asset Management, a.s.

Professional Credo: „ Consult not your fears but your hopes and your dreams. Think not about your frustrations, but about your unfilled potential.Concern yourself not with what you tried and failed in, but with what it is still possible for you to do. "
Pope John XXIII
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24 Hours with Jan Vejmělek, CFA


Employer and position: Komerční banka, a. s., Chief Economist

8:00 – 11:00
Fortunately, I am an early riser and so it is not a big problem for me to start working very early at 6:00 in my home office. I prepare the morning report for our clients, focusing on the latest developments in local and global economies and financial markets, i.e., currencies and fixed income. 
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