Learning Center

How the Focus of Dividends Impacts Returns

Date27 Jan 2014

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Many investors, especially those that use a cash flow approach to investing, focus on companies that pay relatively high dividends. The focus on high dividend payers leads to a value strategy. The question for investors: Is that a good value strategy?

Forget Market Timing, and Stick to a Balanced Fund

Date27 Jan 2014

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Investors were stung, badly, by the financial crisis of 2008. No one wants to go through an experience like that again, which has led to renewed interest in an investing approach called tactical asset allocation.

Lessons From 2013: Part IV

Date24 Jan 2014

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Over the last few years we've seen a dramatic increase in interest in dividend paying stocks. The heightened interest has been fueled by both the media hype and the current regime of interest rates that are well below historical averages. The low yields available on safe bonds led even many once conservative investors to shift their allocations from safe bonds to dividend paying stocks. This is especially true for those who take an income, or cash flow, approach to investing - as opposed to a total return approach, which I believe is the right approach.

Video Blog on Interpreting Hedge Fund Returns Data

Date23 Jan 2014

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In this video blog, I walk through an example of how I responded to a prospective client who was interested in investing in hedge funds that looked particularly enticing based on their marketing collateral.

Media anoints investment gurus, should you pay attention?

Date23 Jan 2014

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Some high profile investors are good at what they do, while others might just be lucky. Often it is hard to differentiate between the two groups, as both can boast of high returns. The media, meanwhile, quick to jump in and snap up a headline, sings the praises of these winning investors, without identifying who among them made strategic moves and who was just lucky -- giving the impression that they are all people to watch.

The Trap of Too Many Choices

Date22 Jan 2014

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I recently got a new smartphone. In the setup process, I was presented with all sorts of options. Selecting a language was pretty easy, but I had to think harder about some of the other ones. Did I want the phone to use my location? Did I want to share data anonymously? Did I want...

The Sad Truth About Hedge Funds

Date22 Jan 2014

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There are many well-documented problems with investing in hedge funds, and it's hard to know where to start in pointing them out. Among them are: lack of liquidity; lack of transparency; loss of control over the asset allocation and thus risk of the portfolio; non-normal distribution of returns (they exhibit excess kurtosis and negative skewness); and they have a high risk of dying (12.3 percent per year from 1994 through 2008).

Five Ways to Navigate the Index Fund

Date22 Jan 2014

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As a proponent of passive or evidence-based investing, I am heartened by the growing number of people investing in index funds. According to a Morningstar article, “A Bull Market in Passive Investing,” only 12 percent of U.S. open-end mutual fund and exchange-traded fund assets were invested in passively managed funds as of Nov. 1, 2003. That percentage has risen to 27 percent, and it continues to grow.

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