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Bloomberg Markets Magazine

Bloomberg Markets Magazine April 2015

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United States
Bloomberg Finance LP
Back issues only

in this issue

2 min
fund fights

RECENT HISTORY HASN’ been kind to active fund managers. Last year, just 21 percent of the funds that actively select U.S. stocks beat their benchmarks. No wonder money is streaming out of active management and into passive index funds and ETFs. One man who has bucked this trend is Albert Nicholas, whose Nicholas Fund tops the diversified U.S. equities category in our annual ranking of the best-performing mutual funds. Nicholas, 84, has outrun the Standard & Poor’s 500 Index by an average of 2 percentage points for the past 40 years. “Some guys who are smarter than I am say we can’t outperform like this, but we have done it, so I will leave it at that,” Nicholas tells Charles Stein (“STAYING ACTIVE,” page 44). One of the smart guys who might…

2 min

“Whiz Kid” MARCH 2015 We all see plans to “fix” the bond markets. But this idea is just silly. The “eBonds” (which are just an inverse credit-linked note) would strip out credit risk. But why? Hasn’t credit risk been one of the best-performing ways to make money over the years? PETER TCHIR Head of macro strategy, Brean Capital New York Mac McQuown is a perfect topic and guy to profile in this manner. MARK HOWARD Head of U.S. credit strategy, BNP Paribas New York “Bob Dudley’s Russian Winter” FEBRUARY 2015 A great article that makes me question even more my stock ownership of BP and Mr. Dudley’s common sense. A minority partnership with Vladimir Putin and a company in Russia? Are you not just a pen stroke away from nationalization there, among other things? JOHN CULVER Wichita, Kansas “The Worst Care Money Can Buy” FEBRUARY 2015 Thanks…

4 min
playing for zero

THE PITCHMAN FOR ROBINHOOD, THE no-fee stock brokerage, looks a little like actor Seth Rogen: bearded, chubby, and, to some viewers, possibly stoned. In the company’s 80-second online ads, he takes aim at millennials, assuring them that they don’t need much cash to triumph in the stock market. Using Robinhood, he says, you don’t even have to pay the industrystandard trading commissions that can erode profits on the small trades newbies tend to make. All you’ll need is Robinhood’s sleek iPhone app. (Android and Web versions are in the works.) The 25-person startup is the creation of Vladimir Tenev, 28, and Baiju Bhatt, 30. The two were roommates at Stanford University, where they studied physics, before moving to New York in 2010 to build high-frequency software systems for hedge funds and banks.…

1 min
saw it coming

$10 billion Approximate revenue at Goldman Sachs in past five years from fund investments that might be capped by the Volcker Rule Source: Regulatory filings A CLOWN CAR. That was the image on the slide Zach Schreiber, co-founder and CEO of PointState Capital, put up to make the point that too many money managers were crowded into the oil’s-goinghigher trade. The date was May 5, 2014, and his audience at the Sohn Investment Conference in New York numbered some 3,000 people, including many famous hedge fund managers. “We believe crude oil is going lower— much lower,” he said. “If you are long, I’m sorry for you.” Benchmark crude oil futures traded at $100 a barrel that day and a few weeks later got above $107. Then the rout began. By early January, the…

1 min
let’s be franc

Sources: Bloomberg, Quaesta Capital AFTER THE Swiss National Bank abandoned its euro peg on Jan. 15, the franc’s value soared in minutes, roiling markets around the world. Unprepared traders got killed, but some were poised to profit from the event. One example was the Swiss-German hedge fund firm Quaesta Capital. The firm had derivatives that paid off when the exchange rate jumped. From a note on its website: “Quaesta Capital’s volatility program [was] prepared for such a move by owning subfloor optionality.” The volatility program, or v-Pro, comes in two flavors, which both had big gains. When contacted about the trade, the firm declined to comment. +41% INTRADAY SWING IN VALUE OF THE FRANC VERSUS EURO +14.5% YEAR-TO-DATE GAIN AS OF JAN. 20 FOR THE “STANDARD” V-PRO STRATEGY ... +28% ... AND FOR THE “DYNAMIC” V-PRO STRATEGY…

1 min
when her future called

ART APPRECIATION What happened? Experts decided it was by John Constable. BUY $5,212 (AT CHRISTIE’S, 2013) SELL $5.2 MILLION (AT SOTHEBY’S, 2015) GENERAL MOTORS sent Mary Barra to Stanford University’s Graduate School of Business, where she earned her MBA in 1990. After she returned to the automaker, Barra spent several years in a midlevel manufacturing job “that wasn’t my fave,” she says. She wanted to use her business school skills. One day in 1997, she got a phone message from someone saying that GM’s then– chairman and CEO, Jack Smith, wanted to interview her for a position in his office. “I thought it was a joke,” she says, and later that same day asked her boss, Ken Varisco, who the prankster was. He looked sheepish and apologized. “I didn’t get a chance to talk to you about…