What we’re reading (4/19)
Back on the saddle here after a little reprieve…
“The Alternative Truth of Private Equity and What That Means for Asset Allocation” (Institutional Investor). “Comparing the characteristics of private equity, represented by the Preqin Private Equity Index, and public equities, represented by the S&P 500 Index, reveals intriguing insights into the potential impact of performance smoothing…high autocorrelation — the notion that past returns are correlated with future returns — is relatively higher for PE broadly defined. In fact, levels of autocorrelation this high indicate that external forces have acted on the returns of this investment in an unnatural way relative to public markets. This may indicate that asset valuations are being used as a tool to reduce volatility via the smoothing process, and that skepticism of the current returns may be warranted.”
“How Not to Invest In The Bond Market” (Wall Street Journal). “In 2023, investors poured a record $54 billion into mutual funds and exchange-traded funds specializing in long-term U.S. government debt, according to Morningstar. More than half of the iShares 20+ Year Treasury Bond ETF’s $46.1 billion in total assets, for instance, came in during last year alone. Right on cue, funds of Treasury bonds maturing in 20 years or beyond have lost about 9% so far this year, handing billions of dollars in losses to their latest buyers.”
“Too Many Passive Investors? There’s No Such Thing” (Bloomberg). “Can markets still be efficient if most investors aren’t even paying attention? Surprisingly, the answer is yes.”
“Amazon Reportedly Hounded An Ex-Trader Joe’s Employee For Data On The Store’s Best-Selling Products” (Salon). “Data concerning Trader Joe’s store products is not readily accessible, according to the Journal. So in order to acquire that information, an Amazon manager repeatedly tormented the ex-Trader Joe’s employee — who remains unnamed in the report — for six months, demanding she send over store data along with emails and documents she received while working with the grocer. The employee eventually succumbed to the pressure and handed over the data along with all the requested documents to the manager.”
“How Nike Won The Battle For Caitlin Clark” (Wall Street Journal). “As Clark was cooling off from that 49-point performance [on Feb. 15, when she had broken the NCAA women’s basketball career scoring record with one of her logo shots from near midcourt], her agents were turning up the temperature on the shoe-company reps. They informed the brands courting her—which included Nike, Adidas, Under Armour and Puma—that winning her commitment would take a historic offer: $3 million a year at the very minimum.”
