I was struck recently by a commercial for the MFS family of mutual funds. In its advertisement, MFS stated: “We believe in the power of active management.” They then went on to boast about the power of their global network, saying: “There’s no expertise without collaboration.” To determine if there is any evidence to back…
Yesterday, a bearded 21-year-old surfer who lives in a 1978 VW bus, and on a self-imposed annual allowance of $10,000, mowed down my beloved Orioles with a 96-mile-per-hour fastball. Blue Jays pitcher Daniel Norris isn’t striving to make a statement with his apparently Spartan existence. He’s simply choosing to live life according to his priorities….
Your emotions are your portfolio’s worst enemy, more so than an actual market correction. By now, you’re no doubt familiar with the claim by author Michael Lewis in his book, “Flash Boys.” Lewis believes high-frequency traders have rigged the stock market, causing harm to Main Street investors. Many respected financial commentators disagree. They believe high-frequency…
Don’t be fooled. Advertisements can mislead investors on advisors’ responsibilities to clients. It’s funny that there’s even a “debate” over whether brokers should be required to act in the best interest of their clients. It’s even more nonsensical that many investment advisors to retirement plans don’t have this obligation. Much has been written on this…
Over the past few months, the difference in historical performance between DFA Small Value (ticker: DFSVX) and Vanguard Small Value (VISVX) has narrowed. For example, for the 10-year period ending December 2014, the compound annual return of DFSVX was 7.9 percent while VISVX earned 8.3 percent. Comparatively, for the 10-year period ending December 2012, compound…
Many index funds are smart choices for investors, but that doesn’t mean all of them are. I have long been a proponent of “evidence-based” investing. For many investors, this means investing in a globally diversified portfolio of index funds with low management fees, exchange-traded funds or passively managed mutual funds. In order to make this…
Quick Take on Fixed Income April 2015 Q: What is the difference between the new issue and the secondary municipal bond market? A: Essentially, there is little difference between the two markets. Their structure is identical in terms of credit quality, revenue source, price and yield. The new issue realm is the initial offering of…
Over the past few months, the difference in historical performance between DFA Small Value (ticker: DFSVX) and Vanguard Small Value (VISVX) has narrowed. For example, for the 10-year period ending December 2014, the compound annual return of DFSVX was 7.9 percent while VISVX earned 8.3 percent. Comparatively, for the 10-year period ending December 2012, compound…
There are a number of explanations for why many individual investors ignore the overwhelming body of academic evidence and continue to play the loser’s game that is active management. Briefly, three of those reasons are: An education system that has failed the public. Unless an investor obtains an MBA in finance, it’s unlikely that person…
Each January, I put together a list of predictions that financial “gurus” have made for the upcoming year—sort of a consensus of “sure things.” I then keep track of whether or not these “sure thing” predictions have actually come to pass. The turn of the calendar into April means that it’s time for our first…
One of my favorite films is “Moonstruck.” It contains a great scene—one I often use when discussing investment strategies I’m asked to review in my role as the director of research for The BAM ALLIANCE, because it makes an excellent and pointed observation. In the scene, Cosmo Castorini, a plumber, explains to a young couple…
Recently, a blog post by Chris Marx, a senior portfolio manager for equities at New York-based AllianceBernstein (AB), came to my attention. In it, Marx commented on a March 9, 2015 article in The Wall Street Journal that highlighted the reality that today’s investors should have lower expectations for future returns because valuations are now…
Human beings don’t like uncertainty, especially when we’re contemplating our financial futures. It’s not enough for us to think that we’ll have enough money to send our kids to college, or to retire. We want to know exactly how much money we’ll need to achieve those goals — and precisely how we’re going to get…
Recent events have led me to conclude that, at least in some ways, the U.K. is ahead of the United States when it comes to investing. The first—and by far the most important—reason I have for drawing such a conclusion is that in January 2013, all licensed financial advisors in the U.K.were required to become…
I’m sure Jim Cramer will be the last one to leave the burning building, but the era of stock picking is basically over. He continues to talk about index funds as being adequate for those who don’t have the time to research individual stocks, but investors — in increasing numbers — are too smart to…
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