In finance and economics we tend to use oversimplified terms like “money” and “bonds” when the reality is that it’s important to be more nuanced in understanding these terms. That’s [ … ]
Category: Investing Basics
3 Reasons to Hold Long Bonds as Short Rates Rise
As short rates rise the tendency for novice bond investors is to believe that the short end of the curve suddenly makes it irrational to hold any long-term bonds. While [ … ]
Why Does the Rebalancing Bonus Work?
One of the best parts about Twitter is that you can follow super smart people and just read their interactions. For instance, yesterday I was creeping on Jeremiah Lowin, Jake [ … ]
The Best Investment Strategy: DISCIPLINE
I was reading this article in the NY Times about a wide ranging diet study. They performed a meticulously controlled test to study what type of diet works best. Their [ … ]
How to Overcome Your Fear of Bonds
I specialize in building relatively conservative “all weather” style indexing portfolios. They are designed for people who have a reasonably long time horizon (at least 5-10 years), don’t want to [ … ]
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 [ … ]
Understanding the Art of Doing Nothing
Most of what we end up doing in our lives is determined not by what we decide to do, but by what we decide NOT to do. In the course [ … ]
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 [ … ]