Hottest links for Thursday October 17th, 2013 the really really late edition (see Wednesday’s edition of hottest links). Get our free daily newsletter (which is being updated to make it even better) and never miss a single linkfest.

Top stories for today include; Remember the age old debate about hedge fund advertisements, well what about mutual funds? A value long short trade in Portuguese equities. Were late so read the rest below!

Hottest Links: Stories

Value Investing/Behavioral Finance

The Reality Of Frictional Costs And The Clash Of Cultures

I was referred to Jack Bogle’s novel, “The Clash of the Cultures, Investment Vs. Speculation,” through a Berkshire Hathaway Inc. (NYSE:BRK.A) (NYSE:BRK.B) chairman letter a few weeks ago and decided to pick a copy up from the public library. [24-Seven-Finance]

5 Design-Informed Approaches to Good Learning

John Maeda is a graphic designer and computer scientist. His book, The Laws of Simplicity, proposes ten laws for simplifying complex systems in business and life. Think of it as simplicity 101.  [Shane Parrish, Farnam Street]

A Theme-Based Approach to Small-Cap Investing

Portfolio Manager Bill Hench talks about what he looks for in potential investments, how the recent housing recovery exemplifies some of his investment themes, and why he sees potential in retail as year-end approaches. [Bill Hench, TheRoyceFunds]

A Potential OI /Portugal Telecom Long/Short Trade

Since my post last week, OI shares have clearly outperformed Portugal Telecom, SGPS (ADR) (NYSE:PT) (ELI:PTC) shares (14.3% vs. 7%). As some readers commented, OI shares would have been the even better alternative so far. OI was actually the best performing Brazilian stock last week. [Valueandopportunity]

Outcome Bias

We are all prone to outcome bias, whereby a decision is evaluated with far too much focus on the ultimate outcome instead of on the quality of the decision at the time it was made, given what was known at the time. [Robert Seawright, Pragmatic Capitalism]

Funds

Greek Bonds Attract New Fans

Greek government bonds are back to within touching distance of their post-crisis highs as renewed optimism in the more fragile areas of the euro zone and a changing investor base force prices higher. [Nick Cawley, The Wall Street Journal]

Mutual Funds Shouldn’t Be Allowed to Advertise

MATT HOUGAN: That strikes me as the wrong question. We’ve let mutual funds that charge way too much, offer terrible transparency and deliver subpar returns advertise direct to consumers for decades. Why should hedge funds be any different? [The Experts, The Wall Street Journal]

This VIX Fund Offers Threefold (or More) Leverage on the S&P

NDR’s Neil Leeson and Wenbo Zhou are writing about ProShares Trust II (NYSEARCA:SVXY).  The volatility fund has been acting as if it has more leverage to the S&P 500 than the ETFs whose names tell investors they’re getting 100% or 200% leverage versus the index, like ProShares Ultra S&P500 (ETF) (NYSEARCA:SSO), or Direxion Daily Financial Bull 3X Shares (NYSEARCA:FAS). [Brendan Conway, Focus on Funds]

ETFs Grow in Appeal for Registered Investment Advisers

An online conference, hosted by ThinkAdvisor, conducted a poll on how advisers use ETFs. [Mark Henricks, Institutional Investor]

Third Quarter Slowdown May Cut Into Private Equity Earnings

After several hot earnings seasons, results may have simmered down for listed private equity firms during the third quarter. [Amy Or, Money Beat]

 

Four Stocks That Attract Activist Investors

Here are four companies that roughly fit the profile of a potential activist target. None is yet known to be in the sights of corporate agitators, but each has lots of cash relative to its market value, a slow competitive pulse, sleepy strategy or a share price that has lagged its peers. The companies include Janus Capital Group Inc (NYSE:JNS), American Eagle Outfitters (NYSE:AEO), Corning Incorporated (NYSE:GLW) and K12 Inc. (NYSE:LRN). [Michael Santoli, Unexpected Returns]

Alternative Mutual Funds: Suppliers and Shortcuts

Alternative mutual funds at present constitute only about 2% of the mutual fund space. But Cerulli expects that number to grow to 14% over the next 10 years. [Cfaille, All AboutAlpha]

Mark Ein Looks to Repeat Past Successes With New SPAC

The SPAC is back. Just as Carlyle Group LP (NASDAQ:CG) quotes & news – Google Finance alumnus Mark Ein, who wants to reinvent special purposes acquisition companies as an alternative to private equity funds. [Julie Segal, Institutional Investor]

Debt Ceiling

For Hedge Funds, Debt Crisis Largely Business

Hedge fund manager David Tawil said that, after living through the collapse of Lehman Brothers Holdings Inc Plan Trust (OTCMKTS:LEHMQ), many on Wall Street are now well-versed in telling a real financial crisis from one that is more of the smoke and mirrors variety and much more easily fixed. [Svea Herbst-Bayliss and Katya Wachtel, Reuters]

Debt Default Drama Queens

Looking at the chart, it is clear that the crisis is 2008 changed market perceptions of default risk in the United States. The US CDS spread increased from 0.105% in January 2008 to 0.73% in January 2009. [Aswath Damodaran]

US CDS

 

Misc

Stockbroker Requests to Scrub Complaints Are Often Granted

Stockbrokers are being routinely allowed to scrub some customer complaints from their public records, leaving investors in the dark about potentially troubled advisers, according to a study of more than 1,600 arbitration cases. [Jean Eaglesham and Rob Barry, Market Pulse]

How Demand for Water Will Play Out

Last quarter, it was painful for investors in Xylem Inc (NYSE:XYL), which has the best collection of water-related assets in the world, with the possible exception of the undermanaged portfolio of Siemens AG (ADR) (NYSE:SI) (FRA:SIE) (ETR:SIE). [By Brian Langenberg, CFA Institute]

XYL daily Hottest links

Hottest Links: Not The Onion

Jealous Saudi Husband Divorces Wife Over Camel Kiss

A jealous Saudi husband divorced his wife after she posted a snap of her kissing a horse online. The innocent image, of his spouse tenderly planting a smooch on the four-legged filly’s face at a farm near Riyadh, was apparently too much for him. [Lee Moran, Daily News]