Until quite recently, 2014 had been a very quiet and calm year for the stock market. With the exception of a few days in early February, the VIX had never spent any time above 20. As August ended, it stood at just under 12. However, volatility has a nasty tendency to spike. And as AQR’s …Read More.
As we have discussed many times, the evidence demonstrates that hedge funds have consistently failed to deliver on their promise of alpha. There is an overwhelming body of research indicating that hedge funds must be ego-driven investments, because there can be no other explanation for why investors continue to pour money down the proverbial drain. …Read More.
I have a surefire way for you to make money in 2015. It’s disarmingly simple, and I’m not even going to keep you waiting. Here’s what I want you to do: Get into the business of managing other people’s money. Specifically, become a broker and tell your clients you can “beat the markets.” This career …Read More.
I was asked recently about a situation in which an investor had to sell stocks from his taxable account in order to meet a cash flow need; in this case, a down payment on a home. He pointed out the “good news” half of his situation. Because the present value of the equities was well …Read More.
I woke up on Dec. 14 to this stunning headline in the New York Post: “High school student scores $72M playing the stock market.” It was a sensational story. The story was sourced to an original report in New York Magazine that reported Mohammed Islam, a 17-year-old student at Stuyvesant High School, was “rumored” to …Read More.
It was a great year for stock market returns. According to data from Morningstar, as of Dec. 24 stocks representing the U.S. market returned 13.95 percent. Morningstar’s intermediate core bond index returned 5.16 percent over the same period. Even with disappointing returns in European and emerging markets, if you held a diversified portfolio, you likely …Read More.
The existence of a value premium—the difference in returns between high book-to-market stocks and low book-to-market stocks—has been well-documented. However, there’s a major controversy as to its source. Some believe it can be explained by risk—that value stocks are the stocks of riskier companies. On the other hand, behavioralists believe the premium results from pricing …Read More.
The historical evidence shows us that, in the long run, a thoughtfully designed, diversified portfolio of passively managed funds typically beats the performance of all but a few active managers. And while it’s simple to structure such a portfolio, it’s not easy to maintain. All too often, emotions—such as greed or envy in bull markets, …Read More.
I am no fan of Jim Cramer. While I fully understand his persona is a carefully crafted schtick designed to entertain, his Mad Money program harms Main Street investors. His stock-picking recommendations are no more likely to be accurate than the flip of a coin. The myth that Cramer has some special insight into the …Read More.
It’s that time of the year again. Everyone is weighing in with tax tips to prepare investors for the tax preparation that follows the new year. I didn’t want to be left out of the fun, so I consulted with John Corn, a certified public accountant and a wealth advisor with Buckingham (with whom I …Read More.
When my children took their first steps, they were tentative. They were quick to grab the nearest object to keep their balance. However, it didn’t take long before they started acting like they were invincible. Seemingly overnight, my children went from hanging on my legs to running across the room. Based on my own very …Read More.
Despite the publicity surrounding the long-term investment performance of certain endowment funds, such as those belonging to Yale and Harvard, little has been known about the overall performance of university endowments until recently. We are learning more these days, thanks to some solid research, including from Vanguard Group, and it’s not terribly encouraging. Discouraging takeaways …Read More.
Giving Tuesday might officially be behind us, but let’s face it—we’re just getting started. The giving season is underway, with the holidays and year-end bearing down on us. So how can we transform one of the more stressful, and sometimes guilt-ridden, elements of the season into something more life-giving? Whether you’re giving to a family …Read More.
Many years ago, my wife and I went to dinner with another couple whom I’ll call Pam and Stan. I went to high school with Pam, and my wife had grown up knowing Stan. They were among the smartest and most successful people we knew. I was always a bit intimidated by them and their …Read More.
When my children took their first steps, they were tentative. They were quick to grab the nearest object to keep their balance. However, it didn’t take long before they started acting like they were invincible. Seemingly overnight, my children went from hanging on my legs to running across the room. Based on my own very …Read More.