Small Value Returns Persistent
It’s been well documented that small value stocks have provided some of the highest returns to investor portfolios over time. The following table provides annualized returns for various equity classes over the 87-year period from January 1927 to December 2013....
Beware Hot High-Dividend ETFs
The low-interest-rate environment we’ve been experiencing for six years now has led to the increased popularity of high-dividend investment strategies. But the popularity of a strategy, however, can sow the seeds of poor future returns. This occurs because cash flows...
A Close Look At Value & Momentum
Two of the most studied capital market phenomena are the value effect, where value stocks outperform growth stocks; and the momentum effect, where recent relative performance predicts near-term returns. Clifford Asness, Tobias Moskowitz and Lasse Pedersen add to the body...
How To Protect Us From Ourselves
I recently read “The Hour Between Dog and Wolf” by John Coates, and it’s one of the best books on human behavior and finance I’ve ever come across. It could literally help investors get protection from their greatest enemies: themselves....
Oil Isn’t Doomed To ‘Contango’
The Wall Street Journal reported that, as of June 10, speculators (emphasis mine) held a near-record bet worth $35.7 billion that oil prices would rise on the New York Mercantile Exchange. In the debate about whether investors should consider including a portfolio allocation to...
Structured-Portfolio Advantages
We now turn our attention to another way in which structured portfolios can add value over index funds; namely, by creating “core funds.” Core portfolios combine multiple asset classes into one fund. The following provides a good example of why...
The Problems With Index Funds
An overwhelming body of evidence demonstrates that the majority of investors would be better off if they adopted indexed investment strategies. And while a total-stock-market index is fine for many investors, indexed investors who desire certain types of exposure face...
International Diversification Is Free
Today concludes our discussion on international stocks and whether investors should consider them in their portfolios. Negative tracking error has resulted in my receiving an increasing amount of calls questioning the wisdom of investing in international stocks. To help you...
Go International To Be Diversified
Today begins a two-part series on investing in international stocks. Over the past four years, international investments have done poorly relative to domestic investments. For example, from 2010 through 2013, while the S&P 500 Index returned 15.9 percent per year,...
Are Dividends A Value Strategy?
As I’ve previously discussed, the Federal Reserve’s zero-interest-rate policy has “pushed” many investors—especially those who use a cash-flow approach as opposed to a total-return approach—to look to stocks and equity funds that have a high dividend yield; that is, that...
