More Money Is Lost Waiting for Corrections Than in Them

We have data for 91 calendar years (or 1,092 months) of U.S. investment returns over the period 1927 through 2016. The average monthly return to the S&P 500 has been 0.95%, and the average quarterly return was 3.0%. With that background, here’s a short, four-question quiz: If we remove the returns from the best 91 […]

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Topics: Advice, Investing, Investment Strategy

Testing the Fama-French Five-Factor Model

The history of asset pricing models is one of evolution. As anomalies are discovered, our knowledge advances and new models are developed. Building on the work of Harry Markowitz, the trio of John Lintner, William Sharpe and Jack Treynor are generally given most of the credit for introducing the first formal asset pricing model, the […]

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Topics: Advice, Market Insights

A Little Known Investment That Pays Big Dividends

Dan Solin on the power of giving. Read the Article By clicking on any of the links, you acknowledge that they are solely for your convenience, and do not necessarily imply any affiliations, sponsorships, endorsements or representations whatsoever by us regarding third-party Web sites. We are not responsible for the content, availability or privacy policies […]

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Topics: Advice, Investing

Protecting Your Finances Following the Equifax Data Breach

Equifax, one of the major credit reporting bureaus, has announced that on July 29 it discovered a data breach affecting as many as 143 million U.S. consumers. Tim Maurer goes on NBR to discuss some steps you can take next if you think your information was compromised. View the video By clicking on any of the […]

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Topics: Advice, Cybersecurity, Risk Management

Understanding Different Types of Risks

Harry Markowitz received the Nobel Prize in Economic Sciences in 1990 for his contributions to the body of work known as “modern portfolio theory.” Probably his greatest contribution was to turn the focus away from analyzing the risk and expected return of individual investments to considering how its addition impacts the risk and expected return […]

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Topics: Advice, Investing, Market Insights

More Hazards of Individual Stocks

In a recent article that highlighted the perils of owning individual stocks, I offered the historical evidence demonstrating how only a small percentage of stocks have accounted for all the gains provided by the market—with the vast majority earning a big, fat zero in aggregate cumulative returns, even before considering the impact of inflation or taxes. […]

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Topics: Advice, Market Insights

Active Management Falls Short With Bonds, Too

In a July 2017 Q&A with WealthManagement.com, Western Asset Management CIO Ken Leech asserts that passive investing is unlikely to play as large a role in fixed income as it does now in equities because active managers outperform their benchmarks much more in the bond market than they do in the stock market. While the trend toward […]

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Topics: Advice, Investing, Market Insights

The Momentum Factor: Fundamental or Price?

Momentum is the tendency for assets that have performed well (poorly) in the recent past to continue to perform well (poorly) in the future, at least for a short period of time. The momentum effect is one of the most pervasive asset pricing anomalies documented in the financial literature: Stocks with the highest returns over […]

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Topics: Advice, Market Insights

Valuations and the CAPE 10: A Metric in Dire Need of Context

With the Shiller CAPE 10 near 30 (29.7 as I write this), it’s likely you have been reading articles that quote gurus who claim the market is on its last legs/breath due to excessive valuations. And the amount of calls I’m getting from concerned investors (especially, it seems, those who hold a certain set of political beliefs) has […]

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Topics: Advice, Investing