The most compelling findings regarding financial decision-making are found not in spreadsheets, but in science. A blend of psychology, biology and economics, much of the research on this topic has been around for years. Its application in mainstream personal finance, however, is barely evident. Perhaps a simple analogy will help you begin employing this wisdom …Read More.
Regular readers of my books and articles are likely well aware that I’m a big fan of the field of behavioral finance. In fact, I try to read everything I can on the subject. The first half of my book, “Investment Mistakes Even Smart Investors Make and How to Avoid Them,” discusses many of the …Read More.
The first half of 2015 again brought hedge funds little in the way of relief from their historically poor performance. Hedge funds entered 2015 coming off their sixth-straight year of trailing U.S. stocks by significant margins. And for the 10-year period from 2005 through 2014—which includes the worst bear market in the post-Depression era—the HFRX …Read More.
Q: What Is the Federal Reserve System? A: The Federal Reserve is the central bank for the United States. It is composed of 12 regional Federal Reserve Banks located around the country as well as the Board of Governors, the independent government agency, in Washington D.C. A 12 member board is selected from these entities …Read More.
The securities industry is all atwitter at the prospect of having to put the interests of retirement plan participants above its own. It’s marshaling its massive resources to fight a rule proposed by the U.S. Department of Labor (DOL) that would require all advisors to be “fiduciaries” to the employees saving for retirement in these …Read More.
Investors certainly have enough to worry about these days. In addition to concerns about the Greek crisis itself, a lot of investors are worried about the risk of it spreading. Greece did indeed default on its International Monetary Fund (IMF) loan, but has since repaid it with the new rescue package it received. Many of …Read More.
The securities industry is all atwitter at the prospect of having to put the interests of retirement plan participants above its own. It’s marshaling its massive resources to fight a rule proposed by the U.S. Department of Labor (DOL) that would require all advisors to be “fiduciaries” to the employees saving for retirement in these …Read More.
Even though financial theory has long held that dividend policy should be irrelevant to stock returns, there has been a rush in recent years to invest in dividend-paying stocks. This trend has been fueled both by media hype and the current regime of interest rates, which are well below historical averages. The low yields on …Read More.
Over the last five years, I’ve spent a lot of time traveling the world to talk to people about money. At least one common theme comes up again and again: anxiety. People are worried about the future and want to know what they can do to prepare themselves for a stable financial life. As we …Read More.
Over the past decade, structured investment products, also known as equity- or index-linked notes, have become increasingly common in the portfolios of retail investors. In 2013 alone, more than $40 billion in structured notes were issued. And this is not just a U.S. phenomenon. A 2009 study by Marc Rieger and Thorsten Hens found that …Read More.
One of the more popular strategies pursued by hedge funds is the currency carry trade. The strategy involves borrowing (going short) a currency with a relatively low interest rate and then using the proceeds to purchase (going long) a currency yielding a higher interest rate, thus capturing the interest differential. The strategy can be “enhanced” …Read More.
Liquidity can be described as the ability to trade a large number of investments quickly, at low costs and when you want to. Because it is a priced risk, liquidity and its associated price effects are an important aspect of financial markets. In illiquid markets, such as the private equity market, discounts are large and …Read More.
“When I hear ‘smart beta,’ it makes me sick.” So said economist and Nobel Prize-winner William Sharpe after he was asked at a conference last year for his thoughts on strategies of this type. And while much, if not the vast majority, of what Wall Street terms “smart beta” makes me sick as well, one …Read More.
What happens when we’re driving and we reach a red light? We stop, right? When the light turns green, we hit the gas. If we don’t, it usually doesn’t take long for the driver behind us to start honking the horn. Anyone who has survived driver’s education (or sitting in the back of a taxi) …Read More.
Who said Congress is dysfunctional? When necessary, its members can come together quite seamlessly. Recently, a group of elected officials, one that crossed party lines, launched an effort with apparently one goal in mind. If you think I am referring to an issue like national security, you would be wrong. So what was this pressing …Read More.