A Bold Way to Pick Winners
It’s a mystery to me why so many investors pay brokers to pick “winning” mutual funds. But they do, and it turns out that they aren’t alone in this often fruitless quest. Pension funds pay obscene fees to “consultants” who claim the...
Annuities and Problems of Longevity
As the director of research for The BAM ALLIANCE, I frequently receive questions related to the advisability of purchasing payout annuities (as opposed to variable annuities, which I generally categorize as products meant to be sold, not bought). Combine the...
Passive Investing Without Indexes
Most investors believe all passively managed funds within the same asset class should have the same, or at least very similar, returns. However, while all index funds and passive structured asset class funds are similar in the way that rectangles...
Don’t Be a “Low-Information” Investor
There’s a lot of talk in the media about “low-information” voters. Ted Cruz may be responsible for coining the term. He referred to supporters of Donald Trump as those “who have relatively low information, who are not that engaged and who are...
Value Beats Glamour
Earlier this week, we examined a recent study contributing to the literature that supports a behavioral-based argument for the value premium, in particular that investors persistently overvalue the earnings prospects of growth (“glamour”) stocks. The study—“Glamour, Value and Anchoring on...
Glamour Can Distract Investors
There’s very strong historical evidence to support the existence of a value premium in equity markets. While there’s no dispute over the existence of the value premium (value stocks have provided an annual average return 5% higher than growth stocks...
Don’t Bother Timing Premiums
Because of the magnitude, persistence, pervasiveness and robustness of their related premiums, several factors have dominated the academic literature. Among them are market beta, size, value, momentum and profitability. However, despite their persistence, each factor has undergone even fairly long...
Are You Living The Life You Chose?
I love finding financial wisdom in unlikely places, like in art and music. These opportunities are more abundant than you might expect. For instance, the punk-Americana outfit, The Avett Brothers, dedicated an entire tune, aptly titled “Ill With Want,” to...
Why You Need To Put the Personal in Your Personal Finances
Tim Maurer, a Charleston, S.C.-based Certified Financial Planner and Forbes contributor who just wrote the book Simple Money: A No-Nonsense Guide to Personal Finance has an enlightening, if unconventional notion. To Maurer, personal finance is more personal than finance. “As...
Don’t Buy Winners
For almost five decades, the literature on the investment performance of mutual funds has found that very few managers possess sufficient stock-picking or market-timing talent to allow them to consistently and reliably produce positive risk-adjusted performance after considering their fees....
