Investment Research from John Rothe, CMT

Understanding and Utilizing the Ulcer Index in Investment Strategies

Understanding and Utilizing the Ulcer Index in Investment Strategies

When constructing an investment model, risk management is a critical aspect of portfolio construction and performance evaluation.

While traditional measures like standard deviation and variance have been a favorite risk gauge by many investors, the Ulcer Index (UI) — a less conventional but highly insightful metric — offers a unique perspective by focusing specifically on downside risk.

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Is Gold a Good Hedge Against Inflation?

Is Gold a Good Hedge Against Inflation?

Is Gold a Good Hedge Against Inflation? Gold has historically been viewed as a reliable store of value and a hedge against inflation. Throughout time, investors have turned to gold during economic upheavals, political unrest, and times of inflation. But how accurate is this belief? Is gold genuinely a good inflation hedge?

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The Problem with Modern Portfolio Theory

The Problem with Modern Portfolio Theory

The Problem with Modern Portfolio Theory: The world of finance is replete with theories and models. Yet, few concepts have left as indelible a mark as Modern Portfolio Theory (MPT). Proposed by Harry Markowitz in his 1952 paper, “Portfolio Selection,” MPT has been both a guiding light and a point of contention among investors for decades.

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Small Businesses Owners Still Facing Challenges

Small Businesses Owners Still Facing Challenges

Small Businesses Owners are Still Facing Challenges. As per the Small Business Administration, there are over 30 million small businesses in the United States, representing approximately 99% of all U.S. businesses. Notably, small businesses employ around 48% of the American workforce, which translates to almost 60 million employees. Undeniably, small businesses play a significant role in our economy.

Highlighting recent developments, the NFIB’s Small Business Optimism Index saw a promising increase of 1.6 points in June, reaching a score of 91.0. It is worth noting that this marks the 18th consecutive month below the 49-year average of 98, indicative of room for improvement. When it comes to key concerns, small business owners are primarily troubled by both inflation and labor quality, with 24% reporting each as their primary problem. Fortunately, there has been a slight decline in the net percent of owners raising average selling prices, currently at a seasonally adjusted rate of 29%. Although still high, this figure reflects a downward trend, offering a glimmer of relief for small business owners. It is vital to mention that this reading is the lowest since March 2021.

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Job Growth in the US Slows to a More Sustainable Pace

Job Growth in the US Slows to a More Sustainable Pace

The latest job report shows a notable slowdown in U.S. job growth, with employers adding 187,000 jobs in July, slightly below economists’ forecast of 200,000 positions. However, there’s no need to worry as this indicates a shift towards a more sustainable pace, which still exceeds the pre-pandemic monthly average. Additionally, the July figure is slightly higher than June’s revised payroll gain of 185,000. In this article, we’ll explore what this means for the economy and the implications for investment decisions.

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Value at Risk (VaR): Uses and Controversies

Value at Risk (VaR): Uses and Controversies

Value at Risk (VaR) is a powerful tool in modern risk management. As a statistic, VaR accurately predicts the maximum potential losses within a defined time frame. This invaluable metric is widely embraced by financial institutions and commercial banks for investment analysis. With VaR, one can gauge the magnitude and probabilities of potential portfolio losses effectively. Risk managers rely on VaR to measure and maintain optimal risk exposure levels.

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John Rothe

John Rothe is the Founder and Chief Investment Officer of Riverbend Investment Management