One of the most important issues in finance concerns the relationship between risk and expected return. John Lintner, William Sharpe and Jack Treynor are generally given most of the credit for introducing the first formal asset pricing model, the capital asset pricing model (CAPM), which was developed in the early 1960s. The CAPM provided the …Read More.
I love finding financial wisdom in unlikely places, like in art and music. These opportunities are more abundant than you might expect. For instance, the punk-Americana outfit, The Avett Brothers, dedicated an entire tune, aptly titled “Ill With Want,” to the scourge of greed and Mumford & Sons taught us that “where you invest your …Read More.
The majority of Americans don’t think they are saving enough and are worried their savings won’t last as long as they do. Only 31 percent of workers who participate in an employer-sponsored retirement plan, such as a 401(k), 403(b) or 457, are “extremely confident” or “very confident” that they will not outlive their money — …Read More.
As explained in my latest book, “The Incredible Shrinking Alpha,” which I co-authored with Andrew Berkin, accompanying the rapid growth of the actively managed mutual fund industry, the average performance of mutual funds has been trending downward over the past few decades. Teodor Dyakov, Hao Jiang and Marno Verbeek—authors of the study “The Trading Performance …Read More.
It’s 6 a.m. in Park City, Utah. I’m in the shower. I go through all the typical shower rituals — I wash behind my ears, shave, and more — until I’m ready to get out. I grab the handle for the water, pause, take a deep breath and then turn it. I don’t turn it …Read More.
Tim Maurer, a Charleston, S.C.-based Certified Financial Planner and Forbes contributor who just wrote the book Simple Money: A No-Nonsense Guide to Personal Finance has an enlightening, if unconventional notion. To Maurer, personal finance is more personal than finance. “As I looked at the landscape of personal finance books, there is almost a shtick they …Read More.
For almost five decades, the literature on the investment performance of mutual funds has found that very few managers possess sufficient stock-picking or market-timing talent to allow them to consistently and reliably produce positive risk-adjusted performance after considering their fees. In other words, there’s little to no evidence of outperformance beyond the randomly expected. As …Read More.
For almost five decades, the literature on the investment performance of mutual funds has found that very few managers possess sufficient stock-picking or market-timing talent to allow them to consistently and reliably produce positive risk-adjusted performance after considering their fees. In other words, there’s little to no evidence of outperformance beyond the randomly expected. As …Read More.
This is my fourth article in a series devoted to helping investors stay disciplined in the face of market volatility—and even lengthy periods of underperformance by risky assets. The first was a December 2015 post dealing with what I call “investment depression.” The second was a January post designed to help investors deal with the …Read More.
Possessing a well-thought-out asset allocation plan that takes into account your unique ability, willingness and need to take market risk is only the necessary condition for success in investing (unless you just happen to get very lucky). The sufficient condition is having the discipline to stay the course. That’s certainly not easy to do when …Read More.
The effect of high-frequency trading (HFT) on market quality is important, and has generated strong interest among academics, investors and regulators alike. Graham Partington, Richard Philip and Amy Kwan—authors of an October 2015 paper, “Is High Frequency Trading Beneficial to Market Quality?”—examined how HFT has changed the dynamics of the market and whether traditional academic …Read More.
Have you ever had a client who’s really used to being in control? I had a client like that once. He was a great guy and a friend who also happened to be a super-successful entrepreneur. For him, when he wanted something to happen, he made it happen.One day, he was frustrated and said, “I …Read More.
Early in my career, I worked for a big brokerage firm. Back then, I made a habit of seeking out the veteran stockbrokers and quizzing them about their careers. One day, I had a pretty extensive conversation about risk with one of those grizzled Wall Street guys. I’ll never forget it. “Let’s assume you’re moving …Read More.
“To get to the magic part of the climb, it’s going to hurt. That’s normal. Your legs should be feeling pain right now. Just keep going.” So said my Revocycle instructor during a recent freewheel spinning class. My legs were indeed burning. But I didn’t change tactics or give up; I just kept pedaling steadily. …Read More.
Last week, Financial Advisor magazine published a story announcing that one of the mutual fund industry’s oldest funds, run by one of its most enduring fund managers, Kenneth Heebner, went out of business when Natixis Global Asset Management liquidated its CGM Advisor Targeted Equity Fund. According to the article, at its end, the fund had …Read More.