When you’re choosing an equity market allocation I generally prefer to keep things simple – just buy a low fee global market cap weighted portfolio and call it a day. [ … ]
Category: How Things Work
Are Individual Bonds Safer than Bond Funds?
The WSJ was out with a piece discussing outflows from DoubleLine’s Total Return Bond fund this week. One of the reasons for the outflows was cited as the lack of [ … ]
Repeat After me: “Bonds Don’t Necessarily Lose Value When Rates Rise”
If you take a basic finance course the first thing you learn about bonds is that bond prices are inversely correlated to interest rates. So, when rates rise bonds prices [ … ]
Why I Prefer to Think of Stocks as Bonds
Bonds have always struck me as fairly simple instruments. In general, you know what a (high quality) bond’s return will be and you know what its time horizon is. That [ … ]
The Alpha Paradox
Here are a few things we know about the financial markets: Beating the market or obtaining “alpha” (excess return) is extremely difficult as evidenced by the annual SPIVA Scorecards. Alpha [ … ]
How to Avoid the Problem of Short-Termism
If I had to pinpoint the biggest problem for most asset allocators I would probably say short-termism. Short-termism is the tendency to judge financial markets in periods that are so short [ … ]
Why Equity Outperforms Credit
In my new paper on asset allocation I go into quite a bit of detail about why certain asset classes generate the returns they do. Understanding this is useful when [ … ]
Understanding Modern Portfolio Construction
My newest research paper, Understanding Modern Portfolio Construction, is available on SSRN. This paper is the culmination of years of work and I consider it to be the most important piece of research I’ve published.
Why Stock Market Declines are Good
James Bullard, the St Louis Fed President, gave an interview today discussing how the stock correction has been good because it has helped to prevent a bubble. He’s inferring that [ … ]