This article is authored by J. Dennis Jean-Jacques, President and Chief Investment Officer at Ocean Park Investments LLC. His perspectives have been featured in financial publications including Barron’s, Fortune and The Wall Street Journal. He is the author of the widely acclaimed,“The Five Keys to Value investing”, McGraw-Hill 2003.
Brexit. Trump. The Fed. Change, whatever it may be, is the only constant in the world. The stock market is not immune, invest in it. ETFs and passive investment strategies are great vehicles to capture directional bets – positive ones, if you are lucky. But in order to truly outperform, you need to go where traditional investors are not and where ETFs, quantitative funds and passive managers cannot go.
March 2nd 2009: It was a cold and windy night at Chicago’s O’Hare Airport. As the snow piled up and the flight delays piled on, I was anxious to get back to New York. The Dow Jones Industrial Average had just hit 10-year lows. I had come to Chicago earlier that day to participate in a private, investment retreat to discuss the economic environment and to debate the applicability of core value tenets. The snow delays presented an ideal setting to think about what was transpiring in the marketplace. It was, quite frankly, a blizzard.
That was then. Today, the stock market is at all-time highs, yet “change” is still as present as ever.
Recent political and economic shifts suggest we may be in the dawn of an unprecedented era of real transformation. Again. Increasing deficits and new financial regulations repealing and replacing old ones. In regard to the stock market, the evolution of new, untested quantitative investment strategies add to the complexity and increase risks for investors. Some of these complexities are man-made, others not. It has been reported that high-frequency trading (computer-run programs that trade hundreds of stocks in nanoseconds) account for nearly two-thirds of the volume in the stock market on any given day. This can cause significant swings in share prices based on a variety of macro and esoteric factors. A few years ago, investment giant PIMCO labeled this phenomenon the “New Normal”, an environment of slow economic growth and higher levels of volatility.
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