‘Gurus’ Without A Clue
In my role as director of research for The BAM Alliance, a community of more than 140 registered investment advisor firms, I’m frequently asked both by clients and other advisors to address the issues raised by market “gurus” who make...
Financialization And Commodities
Slightly more than a decade ago, several studies were published raising the possibility that an allocation to commodities (in the shape of fully collateralized futures) could improve the efficiency of a portfolio due to the diversification benefit (the low to...
When it comes to investing, rely on long-term wisdom
When it comes to the market’s peaks and troughs, investors often don’t react as rationally as they might think. In fact, in times of extreme volatility or poor performance, emotions threaten to commandeer our common sense and warp our memory....
The Carry Trade Defies Theory
The success of the carry trade strategy has led to its widespread proliferation, despite the fact that it contradicts economic theory. In short, this strategy involves borrowing (going short) a currency with a relatively low interest rate and using the...
An Emotional Balance Sheet Can Guide Hard-to-Quantify Financial Choices
A few years ago, I came across a blog post by a writer named Emma Johnson who declared, in no uncertain terms, that “You. Cannot. Afford. To. Be. A. Full-time. Stay-at-home mom. You just can’t.” I like strong opinions because...
What Is Our Attention Really Worth?
Pay attention! We hear this command a lot, often from parents and teachers. People want to remind us to focus on what we’re doing. But I’ve been thinking about a more literal meaning: paying with our attention. Attention is a...
The Meritless Assault on the DOL’s Fiduciary Rule
The assault on the fiduciary rule proposed by the U.S. Department of Labor (DOL) has intensified. Republicans from the House Committee on Education and the Workforce recently asked Labor Secretary Thomas Perez to “immediately withdraw” the rule. Why? Because they...
When Bonds Act Like Stocks
Research into the determinants of fixed-income returns have found that a number of stock and bond market risk factors can be shown to demonstrate explanatory power beyond the standard term-structure variables. Ivelina Pavlova, Ann Marie Hibbert, Joel Barber and Krishnan...
There’s Hope For 401(k) Participants
It has been my long-held view that most 401(k) plans are a national disgrace. Most 401(k) plans are flawed Part of the problem is that the underlying concept behind how many 401(k) plans are administered is fatally flawed. They assume...
Battle Of New Factor Models
In their groundbreaking paper, “Digesting Anomalies: An Investment Approach,” Kewei Hou, Chen Xue and Lu Zhang proposed a new four-factor asset pricing model that goes a long way toward explaining many of the anomalies neither the Fama-French three-factor nor subsequent...
