When interest rates are low, some investors stretch for yield by taking on credit risk. At the same time, many investors are also seeking alternative ways to protect themselves against a potential rise in interest rates, without sacrificing that hard-earned yield. These dual concerns have led many to consider bank loan funds, which recently have…
It’s not too late to make some summer reading recommendations, and a quick review of my bookcase turned up some titles I think would be valuable for any investor. These books cover topics ranging from a detailed explanation of how the markets really work to the basic benefits of financial planning and some of the…
When will financial journalists draw a line between entertainment and information? According to a new book, people subconsciously shut off the part of their brain when watching some financial news shows. The book, “Clash of the Financial Pundits,” co-authored by Jeff Macke and Joshua M. Brown, is a fascinating insight into the real agenda of…
BAM Director of Investor Advocacy Dan Solin recently wrote a blog on the Huffington Post claiming an article in The New York Times was wrong to say investing is an art form and not pure science. Dan explains how this premise is flawed. Investing is science. It is based on the science of capital markets.
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One of the more persistent themes we’ve been hearing from forecasters, for quite some time now, is that the Federal Reserve’s easy monetary policy—starting with its move to drive the Federal Funds rate from 5.25 percent to zero—would inevitably lead to a dramatic spike in inflation. As each new round of quantitative easing (QE) was…
In Mebane Faber’s new book, “Global Value,” he states: “It is ironic that the largest and most famous index, the S&P 500, is really an active fund in drag. It has momentum rules (market cap weighting), fundamental rules (four quarters of earnings, liquidity requirements) and a subjective overlay (committee input). Does that sound passive to…
I have long been skeptical of how fair bond fund prices are — or more accurately said, the potential ability for knowledgeable investors to “game” bond fund prices — in fixed income asset classes where liquidity isn’t great. Two asset classes that immediately come to mind are municipal bonds and high-yield corporate bonds. I finally…
It was a particularly hot summer weekend day in St. Louis, too hot to be outside. So I decided to use the time going through the collection of articles I keep for future use. I save these articles, to be resurrected at a later date, in an effort to hold forecasting pundits and active managers…
For more than a decade now, Standard & Poor’s has been contributing to the debate over active versus passive investing by producing its S&P Indices Versus Active Funds, or SPIVA, scorecards. These twice-yearly scorecards evaluate the evidence concerning the performance of actively managed funds relative to their benchmarks. They show, year after year, that fewer…
What if you could create a forum for discussing the best way to invest in a responsible and intelligent manner? Who would you invite to participate in this debate? Here are my suggestions: There would be no shortage of candidates to advocate stock picking, market timing and fund manager selection. Jim Cramer, for example, could…
If insanity is doing the same thing over and over and expecting different results, investors are insane. The way many investors manage their money seems to perfectly describe Albert Einstein’s definition of insanity: Doing the same thing over and over again and expecting different results. Here’s what isn’t working: trying to predict when to enter…
“We should just move to the country and live in a tent.” I mention this idea to my wife every time I’m confronted with one of the realities of living in Park City, Utah. It seems like almost everyone here is an athlete of some sort, and they take their sports seriously. From mountain biking…
When I lived in Las Vegas, there were billboards everywhere advertising different casinos. One of the most common was the type that promised “98 percent payouts.” I remember thinking how amazing that was. After all, 98 is a lot of percents! It seemed like a really good deal — until I thought about it for…
Smart investors begin their journey by developing an investment plan, or investment policy statement, that includes an asset allocation table. After the plan has been prepared, the next step is to select proper investment vehicles for providing the appropriate exposure to the desired asset classes. A common error among investors who follow a “passive” investment…
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