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Straightforward Investing Since 1969

The investment advisory firm of O’Brien Greene & Co. provides independent investment management to a diverse clientele. Individuals, families, and corporate retirement plans make up the majority of clients, although longtime clients also include trusts, insurance companies, and charitable endowments. We seek the preservation and growth of capital through good and bad markets, and our investment strategy emphasizes several themes: simple, transparent, separate accounts; direct ownership of high-quality stocks and investment-grade bonds; diversification across the market; customized portfolios with a high degree of personal attention. The firm has more than $270 million under management and its offices are located in suburban Philadelphia in the borough of Media, Pennsylvania.

Review & Outlook

Our take on the investing, financial, & economic themes of the day

Creeping ‘Hedgefundification’

22 April, 2014 by Matthew O'Brien in Commentary
“Hedgefundification” is what Stephen Foley in the Financial Times calls the trend;  Ben commented on it here in an earlier post entitled “Madoff’s Revenge: the Rise of Liquid Alternatives”.  It’s the mainstreaming of hedge fund investing, and it’s happening in a number of different ways.  Overall, I don’t think that the trend will benefit ordinary investors.  Ben discussed the growing popularity of “liquid alternative” mutual funds, which in effect are hedge funds sold to retail investors through mutual fund wrappers.  A cynic might say that these “liquid alt” funds allow the ordinary retail investor to share in the excessive fees, illiquidity, and opacity that heretofore have been the exclusive privilege of institutional investors and ultra-high-net-worth individuals.  The Wall Street Journal recently noted the rapid growth of liquid alt funds: Foley’s article in the FT discusses the rise of liquid alts ... read more...

The Cleansing Effects of a Market Correction

15 April, 2014 by Ben O'Brien in Commentary
From April 2 to 11 the S&P 500 fell more than 4%. In some previously high-flying pockets of the market the damage was much worse. Internet stocks and biotech stocks in particular took a hit. The NYSE Arca Biotech index dropped nearly 12% and the technology-heavy Nasdaq fell 6.9% during this period. Yesterday the slide finally stopped with a strong day after some good earnings and retail sales numbers were announced. What do we make of the recent downturn? Not all market pullbacks are the same. This one appears to be a normal and healthy development that is, somewhat ironically, an encouraging sign for investors. The Wall Street Journal captured this counter-intuitive point in a column entitled “Stock Market Jitters Put Investors at Ease.” Why would a market pullback ever put investors at ease? A long bull market without any corrections could be a sign of exuberance that leads to a larger crash. It has been more than two years since we had a 10% correction. An ... read more...

First Quarter Appraisal Letter

15 April, 2014 by Ben O'Brien in Commentary
Today we posted the first quarter appraisal letter in the Quarterly Letters section of the site. The quarterly letter written by Mark O’Brien is also mailed to all clients with a detailed appraisal of their holdings and performance and a personal note. The first quarter letter discusses everything from booming biotech and internet stocks to the implications of quantitative easing and the possibility of $75 per barrel oil: The first quarter gave investors a chance to absorb the assumptions and trends of the extraordinary stock market of 2013 and, we would submit, to see the way forward with greater clarity. Was the historic surge in biotech and Internet stocks in 2013 a harbinger of a new era or a revisiting of the late 1990s high-tech bubble? Does the so-called manufacturing renaissance have legs?  Does, indeed, cheap natural gas in the U.S. change everything?  Is the economy really strengthening or is financial engineering by the government and corporations propping markets ... read more...

Is the Market Shifting from Favoring Growth to Value?

4 April, 2014 by Matthew O'Brien in Commentary
The story of the remarkable stock market gains in 2013 was the outperformance of lower-quality, speculative growth stocks.  Indeed, this is been the story for the duration of the current five-year bull market.  In the first quarter of 2014, however, this story changed, as higher-quality, slower growing value stocks have taken the lead and growth stocks have slowed.  In particular, two of the speculators’ darlings, the biotech and internet sectors, have suffered pronounced corrections.  The Financial Times reported the shift last week, and the Wall Street Journal picks up on it today. It’s too early to say whether this shift will set a real trend, or whether it is a momentary pause in growth stocks’ momentum.  In spite of the Fed’s gradual tapering, there still is plenty of money being pumped into the market by the Fed and other central banks, and investors’ hunger for price returns in a slow growth economy still translate into an appetite for risk. ... read more...

For Big Banks, $100bn in Government Fines is a Small Price to Pay for $590bn in Government Subsidies

1 April, 2014 by Matthew O'Brien in Commentary
Earlier this week the Financial Times tallied up how much Wall Street banks and their foreign rivals have have paid in fines since the financial crisis.  The total is about $100 billion.  In this chart the FT lists the top four banks in terms of fines paid: $100 billion is a lot of money.  It’s not a lot of money, however, compared with the various estimates of the implicit government subsidy–to the tune of $590 billion–given to big banks by treating them as “too big to fail.”  According to an International Monetary Fund (IMF) study released today, its Global Financial Stability Report, banks that are “too important to fail” (TITF), to use its more genteel term, benefit by this amount from artificially low borrowing costs, which they enjoy on the assumption that  governments will bail out their creditors if the banks get into trouble.  These lower borrowing costs translate into more profitable margins for the banks, courtesy of the extra ... read more...

What Does Weak U.S. Labor Force Participation Mean? Here’s a Guess.

26 March, 2014 by Matthew O'Brien in Commentary
The Financial Times published some startling statistics yesterday about how the U.S. labor force participation rate has now dropped below that of the U.K.  The participation rate measures the proportion of adults (above 16 years old) who are either working or looking for work.  This is the first time in 36 years that a proportionately greater number of Britons than Americans have been working. The age cohort with the biggest difference of participate rates between the U.S. and U.K. is among “prime age workers.”  The FT reports, “among 25-34 year olds, UK participation is up from 84.3 per cent to 85.4 per cent between 2007 and 2013. Over the same period in the US, participation fell from 83.3 per cent to 81.8 per cent.” of adults (above 16 years old) who are either working or looking for work.  This is the first time in 36 years that a proportionately greater number of Britons than Americans have been working.  Economists only have speculative guesses about ... read more...

Rethinking Retirement Asset Allocation

28 January, 2014 by Ben O'Brien in Commentary
In some recent posts on target date funds we questioned the wisdom of an automatic “glide path” that continues to increase the amount of fixed income in a portfolio over time even after an investor reaches retirement. We prefer a more dynamic, customized asset allocation. A recent recent Wall Street Journal article entitled “What You Know About Retirement Investing Is Wrong” cited a financial planning study that backed up this view. The study confirms the first part of the usual approach, which is to reduce equity exposure at the time of retirement. From there, however, the study shows that the better approach is to allow the equity allocation to gradually grow again rather than continuing to lower the equity ratio as a target date fund would. The WSJ writes: The report finds that those who take the opposite approach—by reducing equity exposure right after retirement and then gradually raising it over time—are likely to make their money last longer. According to the ... read more...