Angeles Advisors | Blog

  • Blog posts are written by Angeles' CIO Michael Rosen

    Michael has more than 30 years experience as an institutional portfolio manager, investment strategist, and investment consultant.




A hundred years ago, I studied international relations in school (the Sykes-Picot Treaty was a hotly-debated current topic among us). For the few of us focused on the Third World (now given the more agreeable, if not optimistic,  label of developing countries), the research on Brasil could be summarized in a pithy, and unfortunately, accurate phrase:  “Brasil is the country of the future; and always will be.” But then China began devouring every ounce (um..kilo) of ore and agriculture Brasil could dig or grow, thus catapulting the Brazilian economy to 7th largest in the world. The future had arrived. A Read More

The Present is the Future (at least in bond land)


In our long-term assumptions, we generally assume that the total return in fixed income is pretty close to its starting yield. That’s because a bond’s total return is a function of two variables: yield and re-investment yield. As yields move up and down, bond prices move inversely, down and up, but the re-investment rate moves positively with yields. In the short-term, changes in prices have a large impact on total return, but given enough time, the re-investment yield (almost) completely offsets the price/yield function. The table below (courtesy Morgan Stanley), shows the effect of interest rates rising from 3% to Read More

I’m Not Dead!


A great line from a great Monty Python movie, and another crisp cover from The Economist:



On a totally non-market subject, more young adults are living with their parents, and here’s the graph to prove it (courtesy of Hugo Scott-Gall of Goldman Sachs). Top line is US, bottom line is UK. I suspect in places like Italy, the numbers are way higher. Goldman surveyed their interns about which items were priorities for them to own. A house was easily at the top of the list, but interestingly (at least to me), a car was no more important than an expensive handbag or watch. Maybe that’s a function of an urban-centered (and status-conscious) survey group, but I’d Read More

Europe Falling


Yes, pessimism over Europe’s prospects is high, and valuations in Europe are relatively low. But both for good reasons. Below is another data point on how the markets are reflecting the divergence in economic performance and prospects between the US and Europe. Anticipated US inflation 5 years hence is around 2.4%, a little lower than at the start of the year when it was about 2.6%. But forward inflation in Europe is sinking fast, now at just 1.7%, down from 2.2% at the beginning of this year.



I’m interpreting the spike down last week and the strong rebound in the past few days as bullish. See the chart below from Friday’s close (courtesy of our friends at Merrill). We have held our positions in our model portfolios, neither panicking during the deluge nor trying to catch the bottom of this short-term move. Remember that much of what happens hour-to-hour, day-to-day, week-to-week, even year-to-year, has (or should have) little practical impact on long-term investors. Let’s make sure we have the cash to pay the bills and cover reasonable contingencies; after that, we can be largely indifferent to the Read More

Shades of 2007?


Nice graphic in today’s FT showing the spike in vol and sell-off in risk (Greek bond yields jumped from 5.5% to 9% in the past few days). I still think this is mostly noise, a normal, and overdue, correction. But, stay tuned….

Old Age


It’s been 3 years since US equities have corrected more than 10%. But there’s no law about how long rallies can last without a correction. In any event, as diversified, well-positioned investors (as, of course, we believe we are), does it really matter if stocks fall 10%? or 20%? If it does matter, you probably have the wrong portfolio. For the rest of us, volatility really does equal opportunity.



Consider: Volatility spiked to its highest level in over 2 years. Global equities are in negative territory this year, led by Europe’s 10% decline. US 10-year Treasury yields fell more than 30 basis points intra-day yesterday. Consider, too: Mortgage rates are down 100 basis points over the past year Jobless claims are at their lowest levels in 15 years Housing prices nationally are up 7% in the past year Gasoline prices are off 20% this year I have no idea where the bottom is, or when we will get there. But if you believe the US economy remains reasonably robust Read More



Some historical data from Credit Suisse below: MLPs are off 14% this month, pretty bad. Subsequent performance (no guarantees) looks pretty strong though.