Fourth Quarter 2017: Investment Perspective

There’s something inherently funny about anachronisms. I still get a smile when my mom refers to a refrigerator as an icebox.  I grew out of that one, but still call the toilet a commode. Anachronisms encapsulate history nicely, but obfuscate as well. When we introduced our Market Dashboard in this quarter’s webcast, I worried we might have stumbled into an intergenerational disconnect. I realize that by the time my daughters start to drive they will understand ‘dashboard’ as the heads-up display that informs them of the decisions the car has already made for them—if they can be bothered to glance up from Instagram. “The Lidar intercepted a cyclist crossing at 100 feet and applied 40% braking force,” her dashboard will output. Then hopefully, “Your calculus problem set is due tomorrow.” But that’s precisely not the metaphor we had in mind.

On a quarterly basis, Hirtle Callaghan publishes our perspective on the current market.  We have included the first page of that piece below.  If you would like to receive the full perspective, please contact us.

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Second Quarter 2017: Investment Perspective

Nineteen hundred eighty-four was a very good year. That year, the world witnessed a colossal technological advance with the introduction of the Apple Macintosh computer. The Mac was shiny, new, and very exciting. This essay centers on that pivotal year of 1984. However, it appears in Investment Perspectives, not on Buzz Feed, so the content has limited association with Mac excitement. Even so, we believe the story is very important for our understanding of economic cycles and security price behavior—investment stuff.

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First Quarter 2017: Investment Perspective

There is no perfect investment strategy or manager. As Charley Ellis called it decades ago, investing is a loser’s game—a game best won by avoiding losses. Study after study over the past 20 years has shown that investors in aggregate lose by chasing hot asset classes, strategies, and managers, while abandoning lagging asset classes, strategies, and managers. This truth applies to indexing as well. 

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Fourth Quarter 2016: Investment Perspective

Many market observers have described 2016 as a turbulent year. It certainly felt that way. Fears around Chinese growth in January sent the U.S. stock market down 10%. The market clawed its way back to flat in time for the Brexit turmoil. Then the surprise result in the U.S. election jolted markets upwards. If you only experienced markets through Twitter and the New York Times, it was a turbulent year. 

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Third Quarter 2016: Investment Perspective

If your eyes glaze over contemplating the miseries of sovereign real yields, consider for a moment the stock of Swiss food manufacturer Nestlé. Its current free cash flow yield is 4.40% — a healthy 500 basis point premium to the Swiss 10-year sovereign yield. So investors can pay the Swiss government 0.55% per annum to hold their capital and experience the added insult of a loss of real purchasing power. Or they can own a share of Nestlé’s free cash flow stream at an economic return of 4.40%. 

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