Are Dividends A Value Strategy?
As I’ve previously discussed, the Federal Reserve’s zero-interest-rate policy has “pushed” many investors—especially those who use a cash-flow approach as opposed to a total-return approach—to look to stocks and equity funds that have a high dividend yield; that is, that...
The Hurdles Are Getting Higher For Active Management
The goal of actively managed funds is to generate alpha – returns above the appropriate risk-adjusted benchmark. We might add here that the alpha should also be sufficient to compensate for the increased idiosyncratic risks active managers take by failing...
Do Day Traders Evidence Skill?
Professors of finance Brad Barber and Terrance Odean have done extensive research on the performance and habits of individual investors. Among their findings is that, on average, individual investors lose money from trading – and not all of the losses...
Does Private Equity Deliver Alpha
The term private equity – PE – is used to describe various types of privately placed (non-publicly traded) investments. It has grown tremendously over the past 30 years – thanks largely to America’s pension funds as they search for alternatives...
Has The Realized Equity Premium Been Shrinking?
Tying up our two-part series on premiums, today we’ll explore the equity premium. Claude Erb has done a series of papers in which he examines the various premiums – size, value, momentum, and beta – and found that there’s a demonstrable...
Did you sell in May?
One of the more persistent investment myths is that it is a winning strategy to sell stocks in May and then wait to buy back into the market around November. The oft-repeated catch phrase is, “Sell in May and go...
Is there such a thing as smart beta?
“Smart Beta” is a term that is cropping up more lately in professional investment management circles. It is essentially a way that professional investors tweak index funds in hopes of achieving higher returns than funds that simply mimic an index....
Can Past Performance Predict Future Performance
Larry Swedroe Most investors are well aware of the SEC’s warning that past performance isn’t an indicator of future performance. That warning often leads to questions like: “If past performance isn’t predictive, why do you believe that the past outperformance...
