December 28, 2015
What we’re reading this week
Sometimes people like to compare their portfolio with Warren Buffet. 2015 has been a difficult year for anyone not invited in a handful of top performing stocks in the US and Warren Buffet is no exception. This has been his portfolio’s worst year for returns since 2009. Shares in his conglomerate, Berkshire Hathaway are down 11% as of last week.
Elsewhere in money management, Bill Gross’s former fund, the Pimco Total Return Fund, outperformed 89% of its peers in the first calendar year following his departure. While I doubt he feels any remorse the investors that pulled an estimated $52.7 billion from the fund may feel like they made a mistake. The fund achieved it’s outperformance primarily by avoiding the debt of energy companies, emerging markets and other high-yield bonds that caused losses for other investors
Having worked in banking channels for the majority of my career I can’t help but stay interested in what’s new with them. It’s kind of like checking on friends from high school via Facebook. I don’t really want to get back in touch but it’s nice…from a distance. As the Fed raises interest rates, its monetary policy will receive more and more scrutiny. For example, the Fed’s policy of paying interest on reserves could be viewed as a subsidy to the banks because they can borrow reserves at the fed funds rate and get paid the higher interest on excess reserves rate. Katy Burne of the Wall Street Journal writes about this nicely.
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