Carnegie Investment Counsel Blog

 

Investment Risk and How We Perceive It

Posted by Raz Pounardjian on May 10, 2019 9:08:00 AM

 

One of the terms most often heard in the world of finance is “risk” as in "investment risk." Often, people think of risk as something dangerous and to be avoided. There are many circumstances that determine how people view investment risk.

Below are some interesting ways to think about investment risk. 

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Topics: Investing

More Than Just Another Crowd

Posted by Raz Pounardjian on Jul 27, 2018 8:32:00 AM

As many of you know, I am fascinated as to why people make the choices and decisions they make. Many people who work in our industry are focused on valuation ratios, dividends, profitability ratios, balance sheets and charts. With data becoming so easily and readily available these days, I think the extra “edge” these data points produce is becoming smaller and smaller. I believe one area of investing that remains important and useful is sentiment. Digging a little deeper, one can find some interesting cross-currents between expected returns and investor sentiment.

What exactly is investor sentiment? In the most basic sense, investor sentiment is how investors feel about the overall direction of the markets or a particular stock.

One way in which investor sentiment is measured is through the AAII Sentiment Survey. This is a widely cited survey and AAII stands for the American Association of Individual Investors. This association is made up of roughly 150,000 investors, with the average member being in their mid-60s with a median portfolio over $1M. Every week, the AAII surveys about 300 members asking them if they feel bullish, neutral or bearish about the direction of the stock market for the next 6 months.

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Topics: Investing, S&P 500, Cryptocurrencies

Investing for All Seasons

Posted by Raz Pounardjian on Jun 7, 2018 8:29:00 AM
So often in our industry, we hear and read about different trends taking place in the market. In the 1960’s, it was the “Nifty Fifty” blue chip stocks. In the 1990’s it was the tech boom. And in the last few years, we’ve seen the FANG (Facebook, Amazon, Netflix and Google) stocks lead the way. These trends can be defined by different styles or “factors” such as growth/momentum (stocks that exhibit above-average sales and earnings growth), value (stocks that trade at a relative discount compared to the market and or their peers), quality (stocks that have above average margins and consistent earnings growth) and volatility (stocks that are less risky). 
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Topics: Investing, diversification, factor-investing

Stock Picking? Open Your Cupboard.

Posted by Raz Pounardjian on Oct 5, 2015 10:30:00 AM

When we think about investing in equities here at Carnegie, we think of the companies we invest in as businesses. If I polled 5 random people off the street and asked them to list 5 good companies, depending upon their age, sex and race, I would probably hear names like Apple, Facebook, Google, Tesla and Netflix. While these companies have performed admirably in the last few years, we never lose sight of our pursuit in finding great businesses with sustainable business models or what Warren Buffet likes to call a “moat”. What if I told you that one of the best sectors to invest in over time is a collection of boring, slow growing businesses? 

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Topics: Investing, Stocks

Spin-offs: Is the whole better than the sum of the parts?

Posted by Raz Pounardjian on Jun 5, 2015 9:57:19 AM

As a firm with roots in Cleveland, the city is abuzz with excitement surrounding the Cleveland Cavaliers run to the NBA Finals. It is great to experience the excitement that cities like Cincinnati and Philadelphia have  enjoyed in the past and our hope is that this team will end Cleveland’s 51 year title drought. The Cavs will need to play great team basketball to beat the Golden State Warriors but when it comes to investing; sometimes it’s best to separate certain parts of the “team” or businesses. This is often referred to as spin-offs on Wall Street.

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Topics: Investing, Stocks

Bond Geek Alert: A Case for Individual Bonds

Posted by Linda Fousek on May 19, 2015 9:15:00 AM

Growing up on the bond side of the business wasn’t always easy. There was never any snappy cocktail party conversation about what’s going on in the bond market like I often overheard on stocks…go figure.

With the high level of the stock market and an aging population demographic, my how times have changed. The bond market looks mighty interesting to a lot of folks. As a $38 trillion global bond market (vs. the S & P market cap at $18 trillion), I’m glad to see it’s not being totally ignored, but I am concerned as well. A lot of people these days view bond funds as a placeholder to park cash, like a money market vehicle with return, unaware of the downside risks. Bond funds are especially susceptible to volatility and erosion when rates rise (and, oh by the way, rates will rise at some point). 

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Topics: Investing, Bonds

The Nose Knows Great CEOs

Posted by Raz Pounardjian on May 5, 2015 8:00:00 AM

Often times on the news, you may hear the names of famous CEOs like Tim Cook, Warren Buffett and Bob Iger. Why are they discussed so often? What separates them from their peers? Besides being at the helm of some of the most well-known and companies in the world, these CEOs, among many others have done a very good job of creating value for shareholders. How did these CEOs do such a wonderful job of creating value?

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Topics: Investing, CEO

Bondmageddon: A Few Players Dominate Bond Mutual Funds

Posted by Gary Wagner on Apr 29, 2015 12:02:54 PM

Over ONE TRILLION DOLLARS is managed by the top ten bond mutual funds, according to Forbes. This vast pool of assets controlled by a few players affects the whole asset class. In our whitepaper, "Bondmageddon: A Whitepaper on the Hidden Risks and Costs of Bond Mutual Funds," we discuss the current landscape of these investments and the risks investors face today. We also outline the five critical strategic considerations we make when constructing a bond portfolio. Below is an excerpt from the Bondmageddon paper.

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Topics: Investing

Financial Planning Advice: Your 2014 IRA Contribution

Posted by Linda Fousek on Feb 19, 2015 11:14:00 AM

It’s tax time--don’t lose sight of your financial planning goals. It’s not too late to make your IRA contribution for 2014.  You can make 2014 IRA contributions until April 15, 2015. Be sure you are taking full advantage of the opportunity to save for retirement. 

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Topics: Investing, Financial Planning

What Are the Pros and Cons of Low Interest Rates?

Posted by Raz Pounardjian on Feb 11, 2015 12:28:23 PM

You may have heard about low interest rates in the newspaper, online or on the TV, but what do low interest rates really mean for the general public? Interest rates are based primarily upon the supply and demand for money. With the hope of stimulating the economy since the Great Recession, the Federal Reserve has flooded the marketplace with money via its Quantitative Easing program (dubbed “QE”), but the demand for money has simply not kept pace. Consumers and businesses have opted to save more and/or deleverage their balance sheets. What are some of the positives and negatives of low interest rates?

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Topics: Investing

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