With market volatility, do you stay invested or move to cash?
In the market these days, it seems what goes up must come down — and then go up and then down again. On Wednesday, the Dow Jones industrial average opened 100 points higher, but then fell by more than 150...
Does an individual bond ladder offer more protection in a rising rate environment than a bond fund?
Quick Take on Fixed Income February 2016 Q: Does an individual bond ladder offer more protection in a rising rate environment than a bond fund? A: Many investors are worried about how rising interest rates will affect their fixed income...
Saying No, So You Can Say Yes When it Matters
I have a problem: It’s really hard for me to say no to new, exciting projects. If you’re doing creative work at all (and I’m using this term very broadly, so that should mean just about everybody), then you’ve probably...
Small Caps Still Outperforming
As the director of research for The BAM Alliance—a community of about 140 like-minded RIA firms who believe in providing a fiduciary standard of care using an evidence-based investment strategy—I often get requests from other advisors for my help in...
When Risk Doesn’t Lead To Return
Among the more notable anomalies in modern finance is the finding that the lowest-beta stocks have produced higher returns than the highest-beta stocks. Another anomaly is that idiosyncratic (diversifiable) volatility negatively predicts equity returns. In other words, stocks with the...
Spend the Money for the Good Boots, and Wear Them Forever
I like buying high-quality things. And for the longest time, I’ve had this sneaking suspicion that buying high-quality stuff, which perhaps initially was more expensive, actually saved me money in the long run. It wasn’t until very recently, though, that...
Accepting the Uncertainty of Our Financial Life
I have a friend who is an emergency room physician in Salt Lake City. The other day, he described to me an interaction he had with a distressed, uncomfortable patient. After doing all the tests he could and finding nothing...
Arbitrage Limits Cause Mispricing
Recent research on equities has found that, in contrast to classical economic theory, the term-structure of stock returns is downward-sloping. Stocks with low cash-flow duration earn higher returns than longer-duration stocks. The duration of equities is defined as the weighted...
Make Your Retirement Money Last
Whether you are planning to retire, or are already retired, Jane Bryant Quinn’s “How to Make Your Money Last: The Indispensable Retirement Guide” is one of the best “investments” you can make. Ms. Quinn is one of the leading journalists...
News Floating-Rate Note Funds: Too Good to Be True?
Every time interest rates are low, investors begin to make mistakes. They tend to engage in activities that they otherwise wouldn’t undertake—such as stretching for yield by taking on credit risk—if rates were at more “normal” levels like 4% or...
