How to Avoid Letting Money Destroy Your Relationships
Money destroys relationships because people can’t compete with money. Money, after all, doesn’t disappoint you, or express disappointment with you. It’s not that money is inherently bad or evil, but it’s not inherently good or righteous either. Money is simply a...
Consider Factors In Fixed Income
It’s been well-documented that, in equity investing, assets have earned premiums because they are exposed to the risks of a certain factor. Given that the literature provides us with a veritable factor “zoo” (there are more than 300), for investors...
What Is The Profitability Premium?
Robert Novy-Marx’s 2012 paper, “The Other Side of Value: The Gross Profitability Premium,” not only provided investors with new insights into the cross section of stock returns, it helped explain Warren Buffett’s superior performance—he bought value companies with higher profitability...
When False Factors Are Exposed
The world of finance and asset pricing used to be fairly simple. At first, there was just the single-factor capital asset pricing model, with market risk (beta) as the sole factor to explain the differences in returns of diversified portfolios....
Pension Funds Turn In Vain To Hedge Funds
Hit by a “perfect storm” that combined a decade (2000-2009) in which the S&P 500 lost about 1% a year with a rising tide of pension obligations, public workers’ pension funds across the country increasingly began turning to riskier alternative...
A New Factor-Based Approach to Classifying and Measuring the Performance of SRI Mutual Funds
As I’ve written about before, the goal of sustainable, or socially responsible, investing (SRI) can be characterized as “doing well by doing good.” The implication of such double-bottom-line investing is that you are seeking not only profitable investments, but also investments...
Warren Buffett’s Advice Is Widely Respected, Seldom Followed
If investors were asked, “Who do you think is the greatest investor of our generation?” I’d bet an overwhelming majority would answer, “Warren Buffett.” If they were then asked, “Do you think you should follow his advice?” you might think...
A Culture That Encourages Misconduct?
When I started writing books about a decade ago, I took the position that no one should rely on a broker for financial advice. My reasoning was simple. I had never met a broker who recommended a globally diversified portfolio...
Mispricing Underlies Profitability Premium
It has been well-documented that profitability is positively correlated with stock returns—firms with higher profits earn higher returns. The question that we will ask today about the profitability premium relates to its source: Is it based on risk? Or, is...
How Our Fears About Money Could Swing the 2016 Election
I’m getting more questions about what this election will mean for people’s personal financial situations than I’ve received in any previous election that I can remember. Financial advisers almost twice my age tell me the same thing. While I’m sure...
