In the first of this two-part series, we discussed the amazing amount of leverage you can gain — even in the case of an apparently floundering retirement scenario — by moving from a higher cost-of-living area to a lower one. I fully recognize, however, that while many would see this as an exciting retirement adventure, others would view …Read More.
Mutual funds are a huge and profitable business. According to the Investment Company Institute, at the end of 2013, $30 trillion worldwide was invested in these funds. More than half that amount was invested by approximately 96 million Americans in U.S.-based funds. U.S. retirement market assets are an estimated $23 trillion, and most of those investments …Read More.
In November 2013, I wrote an article in The Huffington Post, addressing the phony “debate” among pundits over a possible market correction. The Dow Jones Industrial Average closed that day at 15,967. On July 7, 2014, it closed at 17,024. In that article, I railed against the “gurus” then making predictions about when the inevitable market …Read More.
It’s been well documented that small value stocks have provided some of the highest returns to investor portfolios over time. The following table provides annualized returns for various equity classes over the 87-year period from January 1927 to December 2013. The data is based on theFama-French data series and excludes utilities. Equity Class Annualized Return 1927-2013 …Read More.
It has long been my view that much of what passes for “financial news” is little more than an infomercial for the securities industry. It also serves to feed the egos of self-confident pundits, who feed viewers a daily grist of musings that often include predictions about the direction of the markets, the possibility of inflation …Read More.
The low-interest-rate environment we’ve been experiencing for six years now has led to the increased popularity of high-dividend investment strategies. But the popularity of a strategy, however, can sow the seeds of poor future returns. This occurs because cash flows impact valuations, and valuations are the best predictor of future returns. Given the growing popularity …Read More.
As we have discussed many times, much of the conventional wisdom on investing is simply wrong. For our purposes, we can define conventional wisdom as those ideas that are so commonly accepted that they go unquestioned. Today, we’ll look at the idea that rising interest rates would doom returns to real estate investments, specifically the …Read More.
As far back as the early 1970s, research has shown that the lowest volatility stocks have provided better returns than the highest volatility stocks. These findings run counter to economic theory, resulting in the low-volatility anomaly. The academic research, combined with the 2008 bear market, has led to low-volatility strategies becoming a darling of investors. …Read More.
By Sylvia Nissenboim Recently, a friend and I spent a week at the Grand Canyon. Upon our return, a family member picked us up at the airport. Our stories of the challenging excursion ended abruptly as we swerved onto the highway. Instead of blending into merging traffic, my relative slowed down to let …Read More.
At the beginning of each year, I compile a list of predictions that financial gurus and industry experts tell us are a “sure thing.” And each year, I track how many of these predictions actually come true. So, it’s now time for our second quarterly review of 10 financial predictions that pundits forecast as certain …Read More.
Several years ago, my wife and I sat across from an experienced married couple squirming in their seats as though they feared we were about to deliver some terrible news. But the source of their discomfort was what they were about to drop on us. You see, we were not yet married, but engaged, and …Read More.
Unless you work for a city or state government, you probably don’t have a traditional pension — also known as a “defined benefit plan.” The number of employers offering these plans has decreased sharply, and now, by some estimates, only 29 percent of workers in the United States have access to them. In contrast, 83 percent …Read More.
The 401(k) landscape is definitely improving. But with this improvement comes a new danger: Your plan may be giving giving you a false sense of security. According to a report on 2013 defined contribution plan data, “How America Saves 2014,” recently published by Vanguard, more than 88 million Americans participate in defined contribution plans. The …Read More.
Two of the most studied capital market phenomena are the value effect, where value stocks outperform growth stocks; and the momentum effect, where recent relative performance predicts near-term returns. Clifford Asness, Tobias Moskowitz and Lasse Pedersen add to the body of literature on this topic with their paper, “Value and Momentum Everywhere.” The study, which …Read More.
I recently read “The Hour Between Dog and Wolf” by John Coates, and it’s one of the best books on human behavior and finance I’ve ever come across. It could literally help investors get protection from their greatest enemies: themselves. By way of background, Coates is a senior research fellow in neuroscience and finance at the …Read More.