David Merkel Blog | Talkmarkets | Page 1
Founder, Aleph Blog
Contributor's Links: The Aleph Blog Aleph Investments, LLC

David J. Merkel, CFA — 2010-present, I run my own equity asset management shop, called Aleph Investments.  I manage separately managed stock and bond accounts for upper middle class individuals and small institutions.  My minimum is $100,000.

From 2008-2010, I was ... more

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Estimating Future Stock Returns, June 2020 Update
At present, the S&P 500 is priced to return 3.51%/year over the next ten years. Now if you were buying some ten-year investment grade corporate bonds, you might expect something around 2%. Is that 1.5% over corporates worth it?
Persistent High Volatility
When valuations are high, volatility is typically high as well. When interest rates are low, volatility also is high. Why?
Diversification Has Its Limits
DIversification has mostly ceased to be a free lunch. I say this because, with so many clever investors in the market, most risk assets have become highly correlated with one another.
Crowding The Market In Large Cap Tech
What happens when a party or parties take on an investment position that is large relative to the amount they can afford to lose?
Only A Trickle
The S&P 500 model is forecasting returns of 2.23%/year over the next 10 years. Even if you compare that to the 10-year Treasury Note yielding 0.66%, that’s not enough of a risk premium. We are in the 97th percentile of valuations.
This Has Never Happened Before
Life is somewhat predictable in the short run. That said, there are always surprises that make us say, “This has never happened before.”
Wake Me When It’s Over
The stock market is acting like a bunch of bored teenagers. At present, we have a number of “Adults in the Room” who are arguing that a crisis will come upon us soon from the effects of C19.
Hertz Donut
The stock of Hertz will, with high likelihood, go out at zero. Start with this: the firm has filed for bankruptcy. Stockholders mostly get nothing in bankruptcy.
Estimating Future Stock Returns, March 2020 Update
At the end of March 2020, a rally was starting that would become a new bull market. At that time, the market was poised to deliver a return over the next 10 years of 6.84%/year.
The Troubles Of Hedging Inflation In Retirement
As it is today, most of us (including me), are stuck in the box where we have to make our assets last over our retirements. There are no guarantees. How do we make the assets stretch?
Don’t Lose Your Head
So we had a hard market day yesterday. Maybe COVID-19 will resurge in the USA. The great thing about the USA is that no one is ever truly in charge. Power is shared. Most of the time, that’s a good thing.
Saving, Investing And Storage
Buffett likes to own T-bills when he doesn’t have anything that he wants to buy. Why? He is storing value until the time comes when he can buy something that he thinks offers a superb return over the long haul.
The Challenge For Warren Buffett
My main contention with Buffett, as I am a shareholder, is that you can’t rely on the past when considering how far the market may fall when there is a crisis.
The Rules, Part LXVI
When oil prices plunged, many smaller marginal oil producers went broke. Why didn’t they take a more cautious view of their industry, and run with stronger balance sheets that could endure low crude oil prices for two years?
EC Weekend Notes And Comments, April 25-26
I think the history books will end up calling this the voluntary recession, where governments chose ham-fisted solutions out of fear, and did not consider the long-run implications of draconian solutions like general quarantine.
Fastest Bull Chases Fastest Bear
It may take 6-12 months for the economy to return to normal, assuming that the government does its job well with respect to its restrictions.
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