Don’t Buy Winners
For almost five decades, the literature on the investment performance of mutual funds has found that very few managers possess sufficient stock-picking or market-timing talent to allow them to consistently and reliably produce positive risk-adjusted performance after considering their fees....
Volatility Threatens Discipline
This is my fourth article in a series devoted to helping investors stay disciplined in the face of market volatility—and even lengthy periods of underperformance by risky assets. The first was a December 2015 post dealing with what I call...
Reality Check For Investors
Possessing a well-thought-out asset allocation plan that takes into account your unique ability, willingness and need to take market risk is only the necessary condition for success in investing (unless you just happen to get very lucky). The sufficient condition...
High Frequency Trading’s Impact
The effect of high-frequency trading (HFT) on market quality is important, and has generated strong interest among academics, investors and regulators alike. Graham Partington, Richard Philip and Amy Kwan—authors of an October 2015 paper, “Is High Frequency Trading Beneficial to...
Searching for the perfect investment is counterproductive for clients
Have you ever had a client who’s really used to being in control? I had a client like that once. He was a great guy and a friend who also happened to be a super-successful entrepreneur. For him, when he...
No Shortcuts in Evaluating Your Investment Risk
Early in my career, I worked for a big brokerage firm. Back then, I made a habit of seeking out the veteran stockbrokers and quizzing them about their careers. One day, I had a pretty extensive conversation about risk with...
Feel the Burn: Why Working Out Is Like Investing in the Market
“To get to the magic part of the climb, it’s going to hurt. That’s normal. Your legs should be feeling pain right now. Just keep going.” So said my Revocycle instructor during a recent freewheel spinning class. My legs were...
Star Manager Loses Luster
Last week, Financial Advisor magazine published a story announcing that one of the mutual fund industry’s oldest funds, run by one of its most enduring fund managers, Kenneth Heebner, went out of business when Natixis Global Asset Management liquidated its...
As Investors Flee Active Funds, Will it Become Easier for Active Managers to Outperform?
One of the more frequently asked questions I receive as the director of research for The BAM ALLIANCE is whether, as investors abandon active mutual funds, it will become easier for active managers to outperform. The trend toward passive investing...
