Word to the wise: finding investment insight online
There has been an explosion in investment blogging over the past decade, but which sites are worth reading?
You heard it here first: A trader on the floor of the New York Stock Exchange. Photograph: Brendan McDermid/Reuters
Not that long ago, investors looking for their daily fix of market analysis had to make do with broker notes and market summaries in the mainstream media.
That all changed over the past decade with the explosion in the investment blogosphere. Blogging has dropped off somewhat in recent years, with Twitter now the medium du jour, but online readers are still spoilt for choice.
Here’s a taster of the best of what’s out there:
The Big Picture
The granddaddy of market bloggers, money manager Barry Ritholtz, started his Big Picture blog way back in 2003. More than 25,000 posts later, he remains the best in the business. Ritholtz has a nose for smelling the manure that all too often passes for fact, delivering opinionated but evidence-based analysis.
Famous for calling the market meltdown of 2008 as well as nailing the major market bottom of March 2009, Ritholtz has remained on the right side of the rally since then.
However, he never ceases to admonish the “folly of forecasting”, acknowledging the role of luck in investment and always focusing on process, not outcome.
In recent years, his blog has become more investment-oriented, with less attention paid to trading matters.
It is also a little more mild-mannered, especially since he became a Bloomberg columnist, although he still doesn’t suffer fools gladly.
Just look at his comments disclaimer: “Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off-topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.”
The Reformed Broker
Reformed Broker blogger Josh Brown works with Barry Ritholtz, and shares his gift for savvy, sarcastic commentary. Brown is smart and insightful, but the main reason he has 71,000 Twitter followers is that he can be side-splittingly hilarious.
Take his classic “You Might be a Gold Bug” post, a take on comedian Jeff Foxworthy’s “You Might be a Redneck” sketch: “If you consider diversification to mean a portfolio consisting of gold bullion, gold coins, gold bars and gold futures contracts . . . you might be a gold bug . . . If the birthday cards you send to friends and relatives include warnings about the danger of fiat currencies . . . you might be a gold bug . . . If the family dog’s name is Hyperinflation . . . you might be a gold bug.”
There was also the post on two-word investment outlooks, which ranged from the trader (“Expect volatility”) to the TV anchor (“What’s moving?”) to the economist (“Yes, however . . .”).
Brown’s field guide to stock-market corrections, where he lists the emotions associated with the different stages of market declines, is another classic, as investor feelings escalate from “whatever” to “refreshing”, “nerve-wracking”, “panic” and finally “pack up the kids”.
If you like Wall Street gossip, you’ll love Dealbreaker. But even if you don’t, it’s worth dipping into for the acid-tongued writings of Bess Levin, whose poison pen has reportedly led to some investment banks banning the site (“Welcome home, Morgan Stanley, we missed you,” reads the site’s header).
The Wall Street Journal , too, has been offended, complaining that one particular story was “personally and professionally offensive”.
Dealbreaker is worth reading for the headlines alone. “Five-year ban from the securities industry not as much of a hindrance to doing business as one might’ve thought”, “Carl Icahn summarises his eBay argument with a series of exclamation points”, and “SAC Capital thrilled to be paying largest fine ever for insider trading” are pretty typical fare.
In last week’s StockTake , we noted that record margin debt has, contrary to popular belief, no bearish implications for the S&P 500 – a tidbit learned from the good folks at Bespoke Investment Group.
Bespoke’s blog is made for anyone who values data and evidence above opinion. When commentators warn the five-year-old bull market must end soon, it posts the data on the historical length and strength of previous bull markets. When people note it has been two years since a 10 per cent correction, you can expect a table detailing whether that is exceptional. When markets suffer a pullback, you can expect a clinical examination of the technicals and volatility relative to past experiences.
While strategists routinely trot out their opinions on corporate earnings, Bespoke delves into the minutiae, comparing the figures on any number of fronts.
Always dispassionate, it is an indispensable resource for the active investor.
Business Insider is a sensationalist, click-baiting website favouring borrowed content over original material. So why list it? Firstly, it does a fine job of sifting through the news – occasional gems will be found among the superficial dross. And secondly, it’s worth reading the more lengthy contributions made by its founder, Henry Blodget, who has reinvented himself since being banned from the securities industry in 2003.
Always readable, Blodget’s writings are nuanced and thoughtful, especially on tech firms, market valuation and index investing. Of late, he has been warning that the overvalued S&P 500 could halve over the next year or two – and explaining why, despite that possibility, he has absolutely no intention of selling any of his stocks.
Quantitative trader and author Victor Niederhoffer is famous for saying that, if something can be tested, it must be tested, and that empiricism is at the core of a host of market blogs.
Short-term traders will find ideas at the Quantifiable Edges and PastStat blogs, while investors should enjoy mebfaber.com (@MebFaber), where Mebane Faber makes a solid case for a quantitative and value-driven global investment approach.
Anyone with an interest in backtesting strategies and dissecting academic investment papers should bookmark the excellent CXO Advisory blog.
Much of the blog is open to subscribers only, and market novices will be put off by the dry, academic tone. Serious investors, however, will recognise there is valuable information here.
Be sure to check out the site’s Guru Grades section, which tests the accuracy of well-known investment advisers . The findings are revealing.
To keep up to date with posts by quantitative bloggers, see thewholestreet.com
Long-term investors looking for straightforward guidelines should visit money manager Ben Carlson’s A Wealth of Common Sense blog.
Robert Seawright’s Above the Market blog is also worth perusing, especially his top-10 posts and his advice on default investment settings – that post alone contains more wisdom than you will find in many an investment book.
Dr Wesley Gray’s TurnKey Analyst blog is not for novices, but those interested in behavioural finance, quantitative investing and the enduring benefits of a value-based approach will find much to chew on.
Finally, investors looking to get into the nitty-gritty of stock valuation should check out renowned finance professor Aswath Damodaran’s Musings on Markets blog.
FT Alphaville remains essential reading; Felix Salmon is one of the most influential financial bloggers; Cullen Roche’s Pragmatic Capitalism is excellent; and if you’re looking for one site to bring the finance web to you, check out the daily linkfest at Abnormal Returns.