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.

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Negative Negative is Positive

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Housing is a small part of the larger economic picture, contributing only about 5% to GDP (although including all the ancillary and related services probably triples that number). Still, for most people, equity in their homes represents the single biggest investment they have, and for many, maybe the only investment they own. Many statistics about this economic recovery are disappointing, especially the very sluggish growth rate, averaging just over 2% p.a. since 2010. Other data are more encouraging, such as the halving of the unemployment rate from 10% to under 5%. One of the more impressive markers of recovery is found in Read More


Rupture

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[nota bene: this is a long one; if you don’t have time, just skip to the summary at the end. I promise, no hard feelings.] The political experts were remarkably accurate in last week’s UK referendum on continuing to remain in the European Union, projecting a vote of 52%/48%. The actual final tally was 51.9% to 48.1%, so chalk one up to the pundits. Well, the numbers were spot on, but the sign was the wrong way: instead of a narrow victory to remain, the voters chose to exit. The Bloomsbury Crowd [a group of Cambridge-educated intellectuals who gathered in Read More


La Justice?

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I’m not French, and I’m not a lawyer. So I am certainly not a French lawyer. These facts may be obvious, but I state them as a possible explanation for my lack of understanding the (tortured) logic in a Paris courthouse today. A long time ago, in another time and place (2007 Paris, to be precise), there was a junior trader at a venerable bank (Société Générale, founded 1864 under charter granted by Napoléon III) who was supposed to be arbitraging the spread between equity cash and futures. Not a very sexy job, and one better suited to computers than humans Read More


Floating Oil

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Oil has had a nice recovery this year (see graph for Brent, YTD), up about 18% to over $48/barrel today. Of course, this is still well below the +$100/barrel we saw from 2011 through most of 2014, so will oil continue its climb higher? Um….no. I don’t see any oil tankers in Santa Monica Bay today, but if I looked out my window in Singapore, it would be a very different story. Through the Straits of Malacca, between Malaysia and Indonesia, one of the most strategically important shipping lanes in the world, flows more than 15 million barrels of oil Read More


Housing Has Legs

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Surprisingly strong housing numbers out this morning: new single-family homes rose 16.6% in April to an annual pace of 616,000 (see chart below), well above expectations, and up 23.8% over the past year. Supply of new homes fell to just 4.7 months, all due to faster sales (inventories were flat). Sales are up strongly in the Northeast, solidly in the South and West, although down in the Midwest. The median ($321,100) and average ($379,800) prices jumped 9.7% and 13.5%, respectively, the last year. There is more to come. The graph below shows the data from 1963. We may never reach the Read More


Inside the Triangle

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Complexity makes investing so challenging. Unlike the pure sciences, there are no hard truths in investing, no discoverable axioms that determine outcomes with 100% confidence. At best, we can speak in probabilities, but even these probabilities come with large standard errors. Investing demands humility, even from the best of us. This complexity comes from the infinite number of variables that affect investments. These variables are not just economic and financial, but also political, social and emotional. Investing cannot be reduced to a formula or an algorithm, however many Greek letters they may contain. It’s not just the sheer number of Read More


Still in Neutral

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The first quarter began with a bang and ended with a whimper. At least, that’s the message from the VIX (volatility index—see below). Bouncing around an elevated level of around 28 for much of January and February, the VIX fell 50% to 14 by the end of March. At a high level, we have maintained a pretty neutral stance in our portfolios. I didn’t think the sell-off in the beginning of the year was the beginning of a new bear market, so we held our ground. The March rally brought global equities all the way back to flat for the Read More


Laboring

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In some respects, this is a golden age for labor. The unemployment rate has dropped to 4.9% from a high of 10% in October 2009. It’s not quite as low as the 3.8% in early 2000, or the post-war low of 2.5% in 1953, but it’s pretty close to full employment. The broadest measure of unemployment (U-6, which includes discouraged as well as part-time workers who would like full-time jobs) is somewhat elevated, but has fallen sharply to 9.7%, from a high of 17.1%. 143 million Americans are employed, the most ever. The average wage is over $25/hour, also the Read More


In A Hole

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Two months ago, I offered some hope that drop we saw on the first day of 2016 was a good omen for the rest of the month and year (http://blog.angelesadvisors.com/2016/01/apres-moi-le-deluge/).  I noted that, of the 14 opening day declines since 1928, only 3 (1957, 1978, 2008) portended weak first months. And while 1957 and 2008 were down years for US equities, 1978 was positive. So there was hope (statistically). Forget it. There are lies, damn lies, and statistics (as Mark Twain wrote), and this statistic certainly lied. US stocks lost 5% in January, with another fractional loss in February, making this Read More


Digging Out

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The eastern United States was buried in snowstorm Jonas this weekend, from 42 inches (more than a meter for our non-US friends) in West Virginia to (a mere) 15 inches on Cape Cod. Snowfall records going back more than a century were toppled from Baltimore to New York. Sustained winds in excess of 70 mph added to the mess. Below is the view from my window this afternoon (70 and sunny here in Santa Monica). Now, if these two photos cause some jealousy, I’m fine with that. But my main point is that looking up into a snow bank does Read More