This past October, as I was flying back from Florida, I tried to wrap my mind around how a family birthday party resulted in tears and surprise after my mom suggested that she and my dad wanted to move in with my brother and his family. Shortly after returning to Buffalo, I called my mom…
In this video, Larry Swedroe reviews lessons from 2013. Lessons from 2013 with Larry Swedroe from The BAM ALLIANCE on Vimeo. Copyright © 2014, The BAM ALLIANCE. This material and any opinions contained are derived from sources believed to be reliable, but its accuracy and the opinions based thereon are not guaranteed. The content of…
Socially responsible investing (SRI) has been referred to as “double-bottom-line” investing. The implication is that you are seeking not only profitable investments, but also investments that meet your personal standards. Faith-Based Funds (FBF) can be viewed as a subset of SRI. While SRI applies screens on secular social concerns, FBF screens investments based on the…
Whether they go by such names as “unconstrained,” “tactical asset allocation,” “absolute return,” or “go anywhere,” Wall Street touts the advantages of funds that have the freedom to shift asset allocations to wherever they see the best opportunities. It certainly sounds appealing. And investors must believe these funds have advantages as the number of such…
While embarking on scenic tours can make life both interesting and exciting, they’re best avoided when it comes to the world of investing. The reason is that most “interesting” investments fail to deliver on their promise of returns sufficient to compensate for their incremental risks. This has been especially true of hedge funds. And it…
There’s an interesting paper from Martijn Cremers, a professor of finance at the University of Notre Dame, on the performance of emerging market stocks that are the publicly traded affiliates of multinational companies. But like so much in the world of investing, Cremers’ findings, while certainly alluring, need to be examined closely before investors jump into…
Last year certainly provided active managers with plenty of opportunities to outperform, and it’s worth examining if they really did. For example, while the S&P 500 Index returned 32.4 percent, Netflix (NLFX), the top performer in the index, returned 297 percent. Two other stocks, Micron Technology (MU) and Best Buy Co. (BBY) returned more than…
The most common misconception among investors may be the value of investing in dividend-paying stocks. Almost every week, someone contacts me to extol the virtues of investing in what they call “high quality, dividend-yielding securities.” Often, their interest is spurred by the recent high performance of these stocks. According to one paper by Gregg S. Fisher, published…
Proponents of alternative investments (like hedge funds) have a very effective presentation. They claim these investments have low volatility (risk), offer excellent risk-adjusted returns, and don’t correlate well with stocks or bonds, thereby providing a “hedge” in troubled times. These proponents demonstrate the accuracy of these claims with compelling statistics, displayed in impressive marketing materials….
You should never make investing decisions based on what the market is doing, except for now, maybe. Past experience and reams of studies tell us there is no way to time the market and that we should buy and hold. That said, there are a few exceptions to the rule. With the total United States…
College planning can be stressful. There are too many schools and too many forms. We spoke with Lynn O’Shaughnessy, the author of The College Solution: A Guide for Everyone Looking for the Right School at the Right Price, about the challenges families face when it comes to choosing a college. Q: What prompted you to…
Day three of our lessons from 2013, we’ll dive right in with an examination of hedge fund returns. This one holds the title with the most repeat performances, appearing most years. The HRFX Global Hedge Fund Index earned just 6.7 percent. The table below shows the returns for various equity and fixed
Today, we begin a series designed to help you determine the best way to allocate your assets. I have written a great deal on this subject, but it’s advice worth repeating time and again. We’ll start with focusing on the ability to take risk.
When I ask you to think long term, what comes to mind? Ten years from now? One year? One week? In a world where excellence is now measured in milliseconds, it can be incredibly difficult to think past the moment that’s right in front of us.
Much attention has been paid to expense ratios of mutual funds. Yet, despite the fact that taxes have a substantial impact on the long-term performance of taxable mutual fund investors, far less attention has been paid to the impact of taxes on after-tax returns. And while the evidence is clear that it’s difficult for active fund managers to create superior investment performance by picking stocks or by timing markets, it’s relatively easy to avoid destroying value for taxable fund investors by managing investment taxes. For example, tax-aware funds might attempt to reduce the tax burden by avoiding the intentional realization of any short-term gains and by accelerating the realization of capital losses. Tax management strategies might not only reduce the tax burden, they might also generate lower trading costs. For example, tax-efficient investment strategies exhibit relatively low turnover, generating lower trading costs. In addition, liquidating stock positions with embedded capital losses and holding on to positions with capital gains might generate superior before-tax returns due to the momentum effect.
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