PERSPECTIVES
Provided below is a series of communications that yield insight into 2K Capital’s asset allocation, securities selection, portfolio management and risk management processes; select views on global capital markets and macroeconomic developments are also discussed. Please note that the following material is for informational purposes only and does not constitute investment advice.
9th January 2025
The introduction of the Vanguard First Index Fund in 1976 is perhaps one of the most impactful events within the investment management industry over the previous fifty years. In the decades since, the investing public has allocated capital to passive vehicles at a rapid rate, and these exposures now comprise 54% of total market share among U.S. equity funds. In supporting the merits of passive, proponents invariably cite Eugene Fama’s “Efficient Markets Hypothesis”, Bill Sharpe’s “Arithmetic of Active Management” and Burton Malkiel’s A Random Walk Down Wall Street, all of which make the same assertion – that actively managed funds routinely underperform benchmark indices, a result that is further exacerbated by the fees associated with active… (full text)
An Ethical Justification for the Proscription of Congressional Insider Trading
30th December 2024
On 17th May 1792, two dozen New York securities merchants met to sign the Buttonwood Agreement, thereby establishing the New York Stock Exchange and a formal protocol governing the purchase and sale of stocks. In the centuries since, both the magnitude and influence of capital markets have expanded considerably, and their regulation has become increasingly imperative. The Securities Act of 1933 – a component of Franklin Roosevelt’s New Deal platform – introduced legislation that governed the primary issuance of securities including equities and fixed income instruments. Soon thereafter, Congress enacted the Securities Act of 1934 which addressed secondary market activity. The 1934 Act also created the Securities and Exchange Commission, an independent regulatory authority tasked with enforcing federal securities law. The primary objective of the SEC was to provide an equitable environment for the investing public by outlawing and limiting the prevalence of insider trading, market manipulation and similarly nefarious practices. Interestingly, the SEC’s first chairman – Joseph Kennedy Sr. – was intimately familiar with insider trading after personally employing it and various other market manipulation measures in amassing his fortune during the unregulated pre-crash market of the 1920s… (full text)