Anna Cieslak and Pavol Povala—authors of the paper “Expected Returns in Treasury Bonds,” which was published in the September 2015 issue of The Review of Financial Studies—examined the time variation in the risk premium that investors require for holding Treasury bonds. While most of the authors’ analysis relies on data starting in 1971 (when data …Read More.
In personal finance, almost all of the advice we come across seems to focus on playing defense. We’re always looking for ways to build bigger and better walls to protect ourselves from bad behavior: Cut up the credit cards. Pay only with cash. Stick to a budget. Hide the passwords. It’s all good advice, but …Read More.
On paper, your investments in stocks, real estate or even cash may look like your greatest assets. While all those things are superimportant, you have something else that’s even more valuable. It’s the investment called you. Finding ways to increase your value while doing the things you love may be the most important thing you …Read More.
For many market observers and participants, billionaire Seth Klarman resides in the same “ZIP code” that Warren Buffett once called the home of superstar investors: “Graham and Doddsville.” Klarman is the well-regarded founder and CEO of the Baupost Group, a Boston-based private investment partnership with nearly $30 billion in assets under management. He has also …Read More.
In a series of previous articles on Seth Klarman’s book, “Margin of Safety: Risk-Averse Value Investing Strategies for the Thoughtful Investor,” I showed how his statement that indexing assures mediocre returns was very clearly incorrect. I demonstrated as well that many of his additional contentions about indexing and market efficiency were also false. Today I’ll …Read More.
Professors Eugene Fama and Kenneth French have a new paper, “Incremental Variables and the Investment Opportunity Set,” that provides some important insights for investors considering funds designed to supply exposure to multiple factors, or styles, of investing. In their study, they note: “Much asset pricing research is a search for variables that improve understanding of …Read More.
This document covers several key issues as you plan for retirement and is divided into four sections: Section 1: Determining How Much to Save and Spend Section 2: Portfolio Management Section 3: Risk Management Section 4: Maximizing Social Security Benefits Section 1: Determining How Much to Save and Spend Estimating a Retirement Spending Amount If …Read More.
In a podcast interview posted last week, Tim O’Neill, global co-head of Goldman Sachs’ investment management division, warned investors that if passive investing gets too big, the market won’t work. He then added: “So in terms of the size, a market needs both active and passive investing, because if everybody’s a passive investor, there’s no …Read More.
Every January, I put together a list of predictions that financial “gurus” have made for the upcoming year, especially the ones that gain consensus as “sure things.” I then keep track of whether these “sure thing” forecasts actually came to pass, through a series of periodic updates. The inevitable turn of the calendar into October …Read More.
My book, “Investment Mistakes Even Smart Investors Make and How to Avoid Them,” covered 77 common errors I believe investors commit all too often. I know today there’s at least one more I should have included: discussing individual stock buys or sells at the water cooler. Evidence from the field of psychology emphasizes the strength …Read More.
Imagine a hypothetical guy who lives a responsible financial life. He’s focused on meeting his obligations, even though he doesn’t have a big cushion when it comes to his take-home pay. Things are tight. He’s not quite living paycheck-to-paycheck, but it’s close. Then one day, an external shock completely outside his control occurs, and it …Read More.
If anyone could demonstrate expertise in “beating the market,” you would think it would be hedge fund managers. They get paid hefty fees (often 2 percent of assets under management plus 20 percent of profits) to generate “alpha.” Successful hedge fund managers make obscene amounts of money. The top hedge fund managers earned in excess …Read More.
The market has been experiencing gut-wrenching volatility recently. Monday, Aug. 24 was a particularly unsettling day. The Dow Jones Industrial Average (DJIA) lost 1,089 points before rallying to close down 588. This kind of roller coaster ride creates understandable anxiety among investors. Should you sell and sit on the sidelines, waiting for the market to …Read More.
“It was totally worth it.” In this case, “it” referred to a Vitamix blender that a friend recently had purchased. He wasn’t the first. Indeed, I don’t know anyone who has purchased a Vitamix blender and didn’t share my friend’s effusive sentiment, even after spending between $429 and $719 (for the new line of G-Series …Read More.
Looking to avail yourself of a financial advisor’s services but stumped as to how to pick one? Who better to tell you what to look for than a financial advisor himself? “I believe there are four minimum requirements for anyone you’re considering working with,” said Tim Maurer, certified financial planner and director of personal finance …Read More.