What we’re reading (9/18)
“Lower Prices Mean Higher Expected Returns” (Servo Wealth Management). “The 10-year period from November 2007 through October 2017 was predictably low, just +6.3% per year. What was the annualized return starting instead in October 2008 through October 2017, after the first stage of the decline? It was much higher, +10.7% per year. Of course, the index declined violently for another five months before bottoming out, and expected returns at that point, in March 2009, were higher still: +17.3% per year annually through October 2017.”
“Do Wages Drive Prices, Or Vice Versa? The Answer Matters For Interest Rates” (Wall Street Journal). “[S]ome economists say…the lesson of the past few decades is that while higher prices lead to higher wages, as workers try to claw back lost purchasing power, the reverse isn’t true. If so, high wage growth won’t stand in the way of getting inflation down.”
“Cracking Down On A Wall Street Trend: E.S.G. Makeovers” (DealBook). “E.S.G.-fund makeovers have become the trend du jour on Wall Street: BlackRock, J.P. Morgan, Morgan Stanley, HSBC, WisdomTree, Putnam and MassMutual have all done it. Over the past five years, about 90 mutual funds and E.T.F.s have undertaken similar revamps, according to the mutual fund rating firm Morningstar. And Wall Street firms have started up hundreds of brand-new E.S.G. dedicated funds — seeking to cash in on growing investor demand for such investments…But what may have seemed like a harmless marketing move is now causing some eyebrow raising: Securities regulators are starting to question whether their do-gooder claims are real or fraudulent, at the same time that regulators are seeking to enact new rules and guidelines for what constitutes an E.S.G. investment product or strategy.”
“The Congressional Stock Trading Ban, Explained” (The Week). “A recent in-depth analysis completed by The New York Times revealed that at least 97 members of Congress have engaged in buying or selling stock, bonds, and other financial assets that were directly affected by the committees they served on. Some of those transactions were completed by the representative, while others were reportedly the work of their spouse or a dependent child.”
“Volkswagen Targets $70.1 Billion To $75.1 Billion Valuation In Planned Porsche IPO” (CNBC). “A stock exchange prospectus is expected to be published on Monday, after which institutional and private investors can subscribe to Porsche shares.”
