Burton Malkiel, “The major inefficiency in financial markets today involves the market for investment advice, and poses the question of why investors continue to pay fees for asset management services that are so high.”  (askblog)

Chart of the day

The stock market has powered higher despite positive economic surprises stalling out.  (VIX and More)

Markets

Keep an eye out for a “melt up mode” market.  (UpsideTrader)

In case you needed another reminder of the strength of the market. (Dynamic Hedge)

Equity market sentiment is getting frothy.  (The Short Side of Long)

All eyes are on record high corporate profit margins.  (MoneyBeat)

What’s the deal with the drop in lumber futures?  (Sober Look)

Cancelled trades destroy the integrity of the market.  (Kid Dynamite also MoneyBeat)

Strategy

Why you should take a business-like approach to trading.  (StockCharts Blog)

Traders should focus on this one goal.  (Joe Fahmy)

The gender gap in financial knowledge is a myth.  (NYTimes)

Companies

The only way a Yahoo! ($YHOO)-Tumblr deal makes sense.  (GigaOM)

What is the problem(s) with Wal-Mart ($WMT)?  (Slate)

Why we need a Bitcoin bubble. (Pando Daily, ibid)

Finance

Blackstone Group ($BX) is trying to build a super-hedge fund.  (FT via Dealbreaker)

Acquiring BGI was a huge move for Blackrock ($BLK).  (Morningstar)

Blackrock is beginning to flex its shareholder muscles.  (NYTimes)

Tech IPOs are once again seeing big first day pops.  (MoneyBeat)

We are paying too much attention to 13-Fs.  (Dealbreaker)

Money

Everyone calling for a surge in inflation these past five years has been dead wrong.  (Money Game)

Beware knee-jerk reactions to Fedspeak.  (A Dash of Insight)

A sign that Abenomics might actually be working.  (Money Game)

Economy

Don’t ask an economist for stock market advice.  (NYTimes)

Talk of another housing bubble is premature.  (ValuePlays, Term Sheet)

Ben Bernanke is a techno-optimist.  (Wonkblog)

A look back at the economic week that was.  (Bonddad Blog)

The economic schedule for the coming week.  (Calculated Risk)

Earlier on Abnormal Returns

What you might have missed in Saturday’s linkfest.  (Abnormal Returns)

Top clicks this week on the site.  (Abnormal Returns)

Mixed media

Remote state capitals tend to be higher on the corruption scale.  (Wonkblog)

Want to get a degree in ‘heavy metal music‘?  (Marginal Revolution)

Generational stereotypes are stupid.  (Pando Daily)

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The post Sunday links: high fee follies appeared first on Abnormal Returns.

1. How the (really) rich invest.  (Jason Zweig)
2. GMO is now sitting in 50% cash.  (Market Folly)
3. Bearish investment advisers are on the endangered species list.  (The Short Side of Long)
4. Is David Tepper right on net debt?  (A Dash of Insight)
5. On the great stock shortage.  (The Reformed Broker)
6. If you think 2013=1999, then you are smoking PCP.  (The Reformed Broker)
7. The 4% retirement withdrawal rule is now outdated.  (NYTimes)
8. Don’t trade: the machines have you beat.  (Mark Hulbert)
9. Every Wall Street strategist has been wrong about this rally.  (Money Game)
10. Check out these market divergences.  (Charts etc.)

Here is a look at what else you may have missed on the site:

1. In praise of doing the opposite of your investment instincts.  (Abnormal Returns)
2. An interview with me on a range of topics including HFT and the future of blogging.  (QuantConnect)

Thanks for checking in with Abnormal Returns. You can follow us on StockTwits and Twitter.

The post Top clicks this week on Abnormal Returns appeared first on Abnormal Returns.

Investing

Meet Dylan the day trader.  (Washington Post also TRB)

Is capital loss harvesting overhyped?   (Nerd’s Eye View)

Bad things happen in the markets.  (Morningstar)

Asset allocation, indexing and rebalancing.  (25iq via @researchpuzzler)

Education

How to be a better consumer of the news.  (Learn Bonds)

Seeing is not believing: on the use of charts and R-squared.  (Enterprising Investor)

Research

Does Wikipedia usage presage stock market moves?  (SSRN via @quantivity)

A study looking at the tradeoff between spending rates and shortfall risks in retirement.  (SSRN)

Finance

Just how useless is the asset management industry?  (Justin Fox)

The global securities lending industry is in flux.  (Economist)

When too much due diligence is counterproductive.  (A VC)

Economics

The Fed should care about blowing bubbles for the sake of the little guy.  (Dealbook)

The changing nature of work.  (Pieria)

Estimating trend growth using the CFNAI.  (Big Picture)

It takes companies and government to affect working conditions in the developing markets.  (New Yorker)

Jamie Dimon

Why JP Morgan Chase ($JPM) needs to split the Chairman and CEO roles.  (The Epicurean Dealmaker)

Why Jamie Dimon is the “indispensable man.”  (Businessweek)

Jamie Dimon needs a boss.  (Felix Salmon)

Facebook

The Facebook ($FB) IPO one year in.  (WSJ)

Morgan Stanley ($MS) has done pretty well one year after the Facebook debacle.  (Fortune)

Psychology

On the importance of framing.  (Above the Market)

Our decision making ability is affected by a range of effects.  (The Psy-Fi Blog)

Why rituals work.  (Scientific American)

Society

Are Millenials ever going to drive as much as their parents?  (The Atlantic)

Philanthropy is getting more quantitative.  (WSJ)

Are MOOCs the future of education?  (New Yorker)

How hipsters became so crafty.  (Newsweek)

Health

Your microbiome is more important than you think.  (NYTimes)

On the health hazards of loneliness.  (New Republic)

Why is Indian generic pharmaceutical maker Ranbaxy still in business?  (Fortune)

The Office

Do you remember when The Office was truly great television?  (Grantland)

27 lessons learned from The Office.  (Esquire)

Mixed media

An excerpt from Annalee Newitz’s Scatter, Adapt and Remember: How Humans Will Survive Mass Extinction.  (Newsweek)

Social networks as evolutionary game theory.  (FT Alphaville)

Baseball is not boring.  (American)

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The post Saturday links: harvesting hype appeared first on Abnormal Returns.

Quote of the day

Gerard Minack, “Amateurs normally stand no chance against professionals…Investing is different. None of this would matter if achieving index returns was extremely difficult. But an industry’s been built on indexed funds that seem capable of replicating index returns at relatively low cost.”  (Money Game)

Markets

If you think 2013=1999, then you are smoking PCP.  (The Reformed Broker)

Why it’s a great time to be an investor.  (Conor Sen)

Strategy

You can’t borrow in Japanese Yen even if you wanted to.  (Money Game)

The sorry state of retirement savings.  (WashingtonPost)

Companies

The global art market is hot, hot, hot.  (FT)

Yahoo! ($YHOO) reportedly covets Tumblr.  (GigaOM)

Finance

A big cohort of tech IPOs are on deck.  (WSJ)

The spigots are opening for solar panel funding.  (GigaOM)

Now investors can’t get enough of Jeffrey Gundlach’s opinions.  (HedgeWorld)

ETFs

What’s idea behind the Pimco Foreign Currency Strategy ETF ($FORX)?  (IndexUniverse)

Comparing the big low vol ETFs.  (Morningstar)

Why is there no truly global bond ETF?  (IndexUniverse)

Mixed media

Retirement will kill you.  (BBC)

Why does everyone want everything to taste like birthday cake?  (USA Today via Pat’s Papers)

Five lessons in contentment from Warren Buffett and Charlie Munger.  (Zen Habits via @behaviorgap)

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The post Friday links: the index challenge appeared first on Abnormal Returns.

John Gruber, “Google is a hyper-competitive company, and they repeatedly enter markets that already exist and crush competitors…They want everything; their ambition is boundless.”  (Daring Fireball)

Chart of the day

A look at the S&P 500 on a forward P/E basis.  (Dr. Ed’s Blog)

Markets

Does sentiment still matter?  (Capital Observer)

Check out these market divergences.  (Charts etc.)

Take a breath and look around: things are pretty good.  (The Reformed Broker)

Yet another reason to look at tech stocks.  (YCharts Blog)

MLPs look rich, except relative to Treasuries.  (Income Investing)

Strategy

When no news means information.  (Aleph Blog)

Models help clarify our thinking but are only as good as their builder.  (ContrarianEdge)

Companies

Elon Musk is doubling down on his bet on Tesla Motors ($TSLA).  (Dealbook, SAI, In Pursuit of Value)

The pickup market is back in a big way.  (WSJ)

Southwest Airlines ($LUV) has had a huge run. Is it still cheap?  (SumZero)

Google ($GOOG) is not the new Apple ($AAPL).  (Unexpected Returns also Babbage)

Facebook fatigue is a real thing.  (FT)

Wal-Mart ($WMT) is having a tough time finding the recovery.  (MoneyBeat, Quartz)

Finance

Hedge funds can’t wait to advertise to the unwashed masses.  (The Guardian)

Traders are nervous about the Bloomberg snooping scandal.  (Fortune)

Lessons learned from the Facebook ($FB) IPO.  (peHUB)

Funds

Investors are pouring money in bank loan funds.  (WSJ)

Top ten ETF asset gainers of 2013.  (IndexUniverse)

Global

The Japanese economy resumed growing last quarter.  (FT, WSJ)

Greek government debt has some new fans including credit raters.  (Quartz, FT)

Economy

Not a good week for weekly initial jobless claims.  (Calculated Risk, Capital Spectator, Bespoke)

Welcome to the ‘golden age of deficit reduction.’  (Daniel Gross contra Felix Salmon)

The news on manufacturing is disappointing.  (Pragmatic Capitalism)

Some local housing markets are red hot.  (Bloomberg)

Mixed media

Google+ is a ‘beautiful disappointment.’  (Techland)

The craft brewing industry has gone hop crazy.  (Slate)

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The post Thursday links: crushing competitors appeared first on Abnormal Returns.

Quote of the day

Barry Ritholtz, “There is asset management, and there is infotainment, and never the twain shall meet.”  (Big Picture)

Chart of the day

GLD data by YCharts

Where are gold and Apple ($AAPL) seemingly trading together?  (Money Game)

Markets

On the great stock shortage.  (The Reformed Broker)

Is David Tepper right on net debt?  (A Dash of Insight)

Upside breakouts are everywhere.  (Humble Student)

Just how overvalued are junk bonds?  (Income Investing)

Strategy

Don’t trade if your head is not clear.  (Joe Fahmy)

You can’t judge analysts simply by the numbers. (research puzzle pix)

Retirement

The 4% retirement withdrawal rule is now outdated.  (NYTimes)

The US retirement savings system is average at best.  (NYTimes)

Companies

Blackberry ($BBRY) opened up BBM four years too late.  (A VC)

Loews ($L) is still cheap on a sum-of-the-parts basis.  (Beyond Proxy)

Bloomberg

Bloomberg is expanding beyond its core terminal business.  (Dealbook)

Bloomberg is watching you and most companies are happy with that.  (Felix Salmon)

Is Bloomberg simply trying to do too much under one roof?  (FT Alphaville)

Finance

Banks have been too focused on product and not enough on risk.  (Institutional Investor)

Buyout funds are shifting from buy to build.  (WSJ)

Hedge funds continue to work their way into the mutual fund business.  (FT)

Seasonal Odds has big ambitions.  (Institutional Investor)

ETFs

On the dual standard for using backtest data to market ETFs.  (IndexUniverse)

Financial advisors are driving the growth of ETFs.  (FT)

Running an index is not a no-cost endeavor.  (IndexUniverse)

Global

The Eurozone recession , including Spain, just keeps on getting worse.  (Quartz, Bonddad Blog)

Expect the Bank of England to follow the Fed not the BOJ.  (Gavyn Davies)

New Zealand joins the global currency war.  (WashingtonPost)

Economy

Industrial production declined in April.  (Calculated Risk, Capital Spectator)

Homebuilders are becoming increasingly confident.  (Calculated Risk)

Farmland prices continue to rise.  (Real Time Economics)

Mixed media

The experience of Square shows us that the credit card isn’t going anywhere, anytime soon.  (Slate)

Crowdfunding is changing the way we approach causes.  (FT Alphaville)

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The post Wednesday links: investment infotainment appeared first on Abnormal Returns.

Jason Zweig, “Bond investors who are over the age of, say, 55 know firsthand that bonds don’t always generate positive returns.”  (Total Return)

Chart of the day

High yield bonds yield less today than Treasuries did five years ago.  (Bespoke also Learn Bonds)

Markets

It has been 177 days since the market experienced a 5% correction.  (Pragmatic Capitalism also UpsideTrader)

GMO is now sitting in 50% cash.  (Market Folly)

A look at the evolution of S&P 500 earning estimates.  (Dr. Ed’s Blog)

David Tepper is “definitely bullish.”  (MoneyBeat, Pragmatic Capitalism)

Commodities

The stocks-commodities disconnect is growing.  (FT Alphaville, Free exchange)

Why is lumber correcting so hard?  (Financial Iceberg)

The Saudis welcome the shale boom.  (FT)

Strategy

In investing, as in soccer, there is a big difference between activity and results.  (Bucks Blog)

How volatility affects our investing behavior: hello buy-and-hold!  (The Reformed Broker)

Looking forward to reading Meb Faber’s new book Shareholder Yield: A Better Approach to Dividend Investing.  (Amazon)

Companies

What’s the deal with Amazon Coins?  (Pando Daily)

Netflix ($NFLX) has figured things out…for now.  (Justin Fox)

Square is reinventing the cash register.  (Fortune, AllThingsD)

TransferWise jumps into the money transfer business.  (Quartz)

Hedge funds

Dan Loeb wants to break up Sony ($SNE).  (Dealbook, Breakingviews)

A quantitative UK-based hedge fund has launched with much lower fees.  (Dealbook)

Notes from the 2013 London Value Investor Conference.  (Market Folly)

Finance

Residential REITs are going to come to market fast and furious.  (FT)

Brokerage firms are ‘extincting themselves.’  (InvestmentNews)

Marc Andreesen thinks more companies should come public with dual class shares.  (peHUB)

Should we end small cap decimalization?  (Term Sheet, Felix Salmon)

Bloomberg snooping: the fallout.  (NYTimes, FT, Wonkblog, NetNet)

ETFs

Three new ETFs that target total “shareholder yield.”  (Turnkey Analyst, IndexUniverse, ETF Trends)

Vanguard will launch its emerging market bond ETF in June.  (IndexUniverse)

Fidelity has been cleared to launch actively managed ETFs.  (ETF Trends)

Global

How should we think about Abenomics?  (Tim Duy)

The European project is losing favor among the young.  (FT Alphaville)

Not among the Germans however.  (Money Game)

Is a thaw in Greek finance finally here?  (MoneyBeat)

Is the idea of the BRICs finally over?  (WSJ)

The Odd Couple trade: short Aussie, long the Mexican peso.  (WSJ)

Big trends

World birthrates are falling faster then previously thought.  (Wonkblog)

The implications of the new robotic age.  (Mother Jones also Modeled Behavior, Wonkblog)

Earlier on Abnormal Returns

In praise of doing the opposite of your investment instincts.  (Abnormal Returns)

An interview with me on a range of topics including HFT and the future of blogging.  (QuantConnect)

Mixed media

North Carolina is not crazy about Tesla’s ($TSLA) direct-to-consumer business model.  (Slate)

The NTSB is recommending a lower BAC level from .08 to .05.  (Bloomberg)

Eleven things that make you a bad driver.  (Mental Floss)

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The post Tuesday links: bond disappointments appeared first on Abnormal Returns.

As I discuss in my book the financial media is built on trying to titillate and tease you which often leads to a desire to trade. Unfortunately for most investors deviations from their investment plan turn about to be a losing proposition. Carl Richards writing at the Bucks Blog notes how for those investors with a well-diversified portfolio trading is little more than “entertainment.” Costly entertainment that is. Richards writes:

Everyone else is moving, trading, talking. Why not us? It’s what investing is all about, right? Wrong.

That is called entertainment. If you want a term to justify it, you can call it trading. But the evidence is clear that it doesn’t work. So this is one of those rare opportunities to improve your results by being lazy. Build a portfolio that matches your goals, and forget about it.

Richards notes that we have this bias for action. In the case of university endowments a really simple 50/50 portfolio matched their performance with less risk and substantially less effort. We feel that as the markets move we need to move with them, that we are missing out on opportunities. His recommendation is that investors take a break and “do nothing for while” and see how that goes.

I have written before that most investors would do themselves a favor by “doing less.” Less trading, less time worrying about your investments and more time focusing on those activities in your life where you really can add alpha. In short doing the opposite. For the vast majority of investors, investing isn’t their passion or their forte. Investing in a well-diversified, low cost portfolio that is rebalanced occasionally and optimized for taxes is the best most investors can do.

The post The opposite would have to be right appeared first on Abnormal Returns.

Quote of the day

TED, “Investment banking is a jealous mistress. She does not suffer indifferent commitment gladly. And she has far too many suitors for her favors to dally with anyone who is not willing to give her one hundred percent.”  (The Epicurean Dealmaker)

Chart of the day

Behold the sector rotation during the past month.  (All Star Charts)

Markets

Fewer Americans have participated in this rally.  (Money Game)

The S&P 500′s P/E is at a three-year high.  (Crossing Wall Street)

Whatever happened to high yield bond defaults?  (FT)

Rich Bernstein on why investors should focus on US stocks not emerging markets.  (FT)

Multi-asset class funds have a hard time beating a basic benchmark.  (Capital Spectator)

Strategy

Institutional investors rely heavily on past returns to make manager decisions.  (SSRN)

What do you get in John Heins and Whitney Tilson’s new book The Art of Value Investing: How the World’s Best Investors Beat the Market.  (Reading the Markets)

Bob Rice author of The Alternative Answer: The Nontraditional Investments That Drive the World’s Best-Performing Portfolios on liquid alternative assets.  (Daily Ticker)

Companies

What industry is most at-risk to an Apple TV?  (HBR)

Why does Facebook ($FB) want to buy Waze?  (SAI)

Facebook Home looks like a flop.  (TechCrunch via SAI)

Not all buybacks are created equal.  (YCharts Blog)

How ABC plans to combat Aereo:  live streaming.  (GigaOM)

Finance

Hedge fund titans are reading from the wrong inflation playbook.  (Behavioral Macro)

Mortgage hedge funds are all the rage.  (Term Sheet)

Bloomberg LP is a data sucking machine.  (Quartz also WSJ)

American banks are once again the world leaders.  (Economist)

IPOs are once again the rage.  (WSJ)

Global

Where the heck is inflation?  (Money Game, Bonddad Blog)

Oil-tonne miles are surprisingly on the rise.  (FT)

Economy

Retail sales unexpectedly rose in April.  (Calculated Risk)

How might the stock market respond to Fed tightening?  (Tim Duy)

Is the Fed targeting the wrong unemployment rate?  (Gavyn Davies)

Mixed media

Career advice from economists.  (Planet Money)

Behold the future: in-vitro meat.  (NYTimes)

It is in our nature to need and tell stories.  (Scientific American)

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The post Monday links: a jealous mistress appeared first on Abnormal Returns.

DH, “The market has gone from walking on pins and needles to a bit of a swagger.”  (Dynamic Hedge)

Chart of the day

Bearish investment advisers are on the endangered species list.  (The Short Side of Long)

Markets

Every Wall Street strategist has been wrong about this rally.  (Money Game)

Oh great, Nouriel Roubini likes the stock market.  (Fortune)

Americans are giving up on CDs.  (Sober Look)

Opportunities remain for investors willing to look beyond recent winners.  (A Dash of Insight)

A look at sector rotation into the transports.  (See It Market)

QE will not end in a day.  (The Reformed Broker)

Strategy

How the (really) rich invest.  (Jason Zweig)

Don’t trade: the machines have you beat.  (Mark Hulbert)

On the dangers of univariate analysis: the case of corporate profit margins.  (The Brooklyn Investor)

Companies

Bloom Energy has raised some $1.1 billion so far.  (Quartz)

Thes lesson for founders from the Dell ($DELL) saga.  (Pando Daily)

Company managements are increasingly finding themselves in the middle of proxy battles.  (WSJ)

Hedge funds

Why we shouldn’t be surprised hedge funds have poor returns.  (Noahpinion)

Why aren’t investors fleeing hedge funds?  (New York)

Hedge fund advertisements are coming soon to a screen near you.  (WSJ)

Finance

It is finally time for actively managed ETFs?  (Barron’s)

A look at this week’s ‘Friday night dump‘ of SEC filings.  (Quartz)

Moving up is becoming tough for young investment bankers.  (Quartz)

Economy

How the Fed may exit from its extraordinary monetary measures.  (WSJ)

Should the Fed care about asset bubbles?  (Rational Irrationality)

How technology spreads.  (Economix)

Student loans are putting a cap on spending.  (NYTimes)

A look back at the economic week that was.  (Bonddad Blog)

The economic schedule for the coming week.  (Calculated Risk)

Earlier on Abnormal Returns

What you might have missed in our Saturday long form linkfest.  (Abnormal Returns)

Top clicks this week on Abnormal Returns.   (Abnormal Returns)

Mixed media

The Bloomberg data breach story is only going to get bigger.  (NYTimes, CNBC, Reuters, Buzzfeed, Pando Daily)

Why e-mail newsletters won’t die.  (Wired)

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The post Sunday links: a bit of swagger appeared first on Abnormal Returns.