Tag Archives | asset classes

nyse modern

The Cost of Tracking any Index

Indexes were originally developed in the late 1800’s, early 1900’s, as a barometer to what markets were doing overall, rather than trying to determine trends of the cumulative market by looking at different specific stocks making up the market; because, some stocks may fall, and others may rise in price, but what is the overall […]

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COS_09

The Rise of Short Term Rates

“While many market participants wait for the “inevitable” rise in short-term interest rates expected when the Federal Reserve tightens its monetary policy, some investors may have missed the increase in short-term rates already underway as a result of market forces. ” The rise of_short-term_rates from Better Financial Education Note: Your RSS feed or email may […]

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Investment Philosophy

Index Funds Anchor Your Portfolio

Index funds often earn higher returns than the average actively managed mutual fund. What’s their secret? The differences between retail index funds and actively managed funds are discussed below. The article does not discuss a more broadly defined index that Dimensional (DFA) has developed. Retail indexes, as the article discusses, are defined by an investment […]

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shrinking alpha

“The Incredible Shrinking Alpha” – a brief review

The ability to beat the market returns is shrinking. This ability is measured by a statistical term called “Alpha.” Swedroe and Berkin’s book “The Incredible Shrinking Alpha” discusses how Alpha has shrunk, as well as the ability to repeat this feat, called persistency, is low too. What is Alpha? The ability for a manager to […]

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blackswan

Black Swan Portfolio Construction – is it possible?

Black Swan events are events that come as a surprise … like the surprise of seeing a black swan when most swans are white in color. How do you invest in Black Swan markets? Such events are “often inappropriately rationalized after the fact with the benefit of hindsight.” (Wikipedia). Most people then try to rationalize […]

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dividends

Individual Bonds or Bond Funds or Dividends?

Most people think income can come only from income sources like dividends or bonds. For a discussion about dividends:  The Dividend Income Illusion and Should You Just Focus on Dividends? This blog briefly summarizes considerations between individual bonds and bond funds, should provide a brief summary of how each compares to the other, when combined with the below […]

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Dimensional

Why Our Firm Uses DFA Funds

I could write a lot about why I recommend Dimensional Funds for client access to the markets – what fuels their plans. You see the PLAN is what you want to eventually do with your money. INVESTING is what fuels your plan. People get these two backwards and prioritized wrong! Fundamentally, if you invest through the […]

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behavior

Diversification? Why?

It is early March 2014 as I write this blog. 2013, in hindsight, was a no-brainer year – just stay invested in the U.S. right? Well, this view suffers from at least two behavior flaws: 1) the influence of recent events and 2) hindsight bias. By the time this is scheduled to post at the end of […]

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past present future

“Skittles” Charts examined further – what do they say?

Many readers have probably seen charts like the below, that show in many different ways, which asset class was the high return with rankings to the lowest returning asset class during any given year. What is hard to see in any of these charts, is the relative ranking of where those returns are one year […]

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behavior

The Art and Science of Portfolios

Client portfolio construction is part art and part science. Often the concepts of diversification and asset allocation are intermixed … they are actually two different things. The science looks at what makes two, or more, investments different from each other. And then combines those with common characteristics into one bundle (an index mutual fund). The […]

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