A Private-Equity Puzzle
Capital committed to private equity (PE) funds worldwide has risen substantially in the last two decades, thanks largely to U.S. pension funds searching for alternatives to public equity markets that might help them meet their return objectives. Endowments seeking to...
Passive Investing Without Indexes
Most investors believe all passively managed funds within the same asset class should have the same, or at least very similar, returns. However, while all index funds and passive structured asset class funds are similar in the way that rectangles...
‘Fiduci-what?’ Most clients don’t know what the fiduciary duty really means
Earlier in my career, I switched firms. The change meant I left a position where I couldn’t legally call myself a fiduciary. But at the new firm, I was required to be one. I was super excited. Finally, I could...
When Feelings of Comfort Trump Spreadsheet Math
“Carl,” my friend told me, in a heated moment of financial debate, “You need a new truck like you need a bullet in the head.” I fired something back about how off base she was, how it would be a...
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 who are...
You Can’t Do Anything You Want
“A lot of career advice begins right back at age six,” writes author Chris Guillebeau in his newest book, Born for This: How to Find the Work You Were Meant to Do. But in case you’re expecting some fluffy self-help...
A Bold Way to Pick ‘Winners’
It’s a mystery to me why so many investors pay brokers to pick “winning” mutual funds. But they do, and it turns out that they aren’t alone in this often fruitless quest. Pension funds pay obscene fees to “consultants” who...
The Paradox of Finding Motivation Through Fear
I was driving with a friend recently and telling him about some projects that really excited me. I mentioned a new book I’m working on, an article I’m writing and this new hobby of adventure motorcycling in the desert. He...
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...
Taxes Can Be A Real Drag
As the annual S&P Active Versus Passive (SPIVA) scorecard demonstrated, 2015 was another painful year for U.S. actively managed funds. It found that 66.1% of large-cap managers, 56.8% of midcap managers, 72.2% of small-cap managers and 61.9% of real estate...
