One of the more common investing myths is the idea that indexing is necessarily “average”.¹ It makes sense at first. If you bought all of the stocks in the market [ … ]
Category: Investment Strategy
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 [ … ]
The Appropriate Portfolio vs the Optimal Portfolio
Should we pursue appropriate portfolios or optimal portfolios?
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 [ … ]
The Perils of the Safe Income Illusion
Here’s Josh Brown with a good piece on dividends. He asks, “are we too obsessed with dividend income?” Tricky question, but I would tend to answer by saying that, when we [ … ]
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 [ … ]
Control What You Can Control
Vanguard has a timely reminder for investors – “cost is the new performance”.¹ We’ve entered a new era in the asset management business. The era of low fees. We now [ … ]
Assessing the Utility of Wall Street’s Annual Forecasts
It’s that time of year when everyone starts preparing for the New Year and Wall Street makes its 2016 predictions. I’ll get right to the point here – these annual predictions [ … ]