Comparisons With Others Can Obscure Our Own Goals
On and off over the years, I have used a training app called Strava. It allows you to keep track of your performance on different biking, running and skiing trails. You can even break down overall times into sections or...
How to Find the Best Investment Advice
One of the most difficult aspects of investing involves sifting through the daily barrage of advice offered by “experts.” More often than not, this advice is calculated to enrich the securities industry at your expense. One way to determine whether...
A Closer Look At Evaluating Risk
Nils Friewald, Christian Wagner and Josef Zechner—authors of the study “The Cross-Section of Credit Risk Premia and Equity Returns,” which appears in the December 2014 edition of the Journal of Finance—studied the relationship between a firm’s default risk and that...
Explaining The Low Vol Anomaly
One of the biggest problems facing the first formal asset pricing model developed by financial economists, the capital asset pricing model (CAPM), was that it predicts a positive relationship between risk and return. Empirical studies have found that the actual...
This Book Obliterates Active Management
An intriguing new book, “The Incredible Shrinking Alpha,” presents an overwhelming weight of research which leads to the inescapable conclusion that the pursuit of “alpha,” or returns above an appropriate risk-adjusted benchmark, is a fool’s errand. The book was written...
