Learning How to Deal With the Haters
We all like to act as if we’re immune to the vitriol of haters. It’s almost cool to pretend that it doesn’t affect us, like we’re all bulletproof and have some kind of armor against it. And while that might...
Success or Failure: The Evidence From Style-Rotating Funds
Actively managed funds tout their ability to successfully rotate across styles (such as large-caps versus small-caps and value versus growth) or sectors (industries) and thus outperform passive strategies (such as index funds). It is certainly true that investment styles do...
Why Your Bond Portfolio May Be Riskier Than You Think
With the broader markets retracting much of their declines from early 2016, many investors find themselves letting out a sigh of relief and stepping back from the closer look they would have taken at their holdings had things continued heading...
Don’t Be a ‘Low-Information’ Investor
There’s a lot of talk in the media about “low-information” voters. Ted Cruz may be responsible for coining the term. He referred to supporters of Donald Trump as those “who have relatively low information, who are not that engaged and...
‘Smart’ Money Blunts Mispricing
A large body of evidence demonstrates the persistence of numerous anomalies in stock prices, which suggests they can depart from fundamentals for periods of time. The anomalies include: Failure Probability: Stocks with a high probability of failure have lower future...
Style Drifting: Does It Add Value for Actively Managed Small-Cap Funds?
Investors choose mutual funds based on their investment objectives. In pursuit of said objectives, they can choose from among the broader asset classes (such as stocks and bonds) with additional, more specialized options available within each class. These decisions are...
Spikes Can Explain Returns
Recently there has been a lot of research on the question of whether higher moments of return other than volatility (specifically, the skewness of returns) helps to explain equity returns. (I’ve included a brief definition of skewness and a demonstrative...
Glamour Can Distract Investors
There’s very strong historical evidence to support the existence of a value premium in equity markets. While there’s no dispute over the existence of the value premium (value stocks have provided an annual average return 5% higher than growth stocks...
Value Beats Glamour
Earlier this week, we examined a recent study contributing to the literature that supports a behavioral-based argument for the value premium, in particular that investors persistently overvalue the earnings prospects of growth (“glamour”) stocks. The study—“Glamour, Value and Anchoring on...
Stay Diversified Through Lows
There are several keys to having a successful investment experience. The first is to create a well-thought-out financial plan. This plan should begin with identifying your ability, willingness and need to take risk, as well as what it is you...
