Learning Center

Assessing Expected Returns

Date27 Oct 2014

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At a recent meeting with a nonprofit organization, my firm was asked to explain why we don’t consider historical stock returns the best estimator of future returns. They wanted to understand why we instead rely on our own forecasts. Their request came in part because another firm had suggested in a previous pitch that forecasts...

5 Investing Rules In Case of a Market Correction

Date27 Oct 2014

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I have long felt the greatest threat to the retirement dreams of most investors can be found in the combination of misinformation promulgated by the securities industry and much of the financial media. Together, they deliver a stream of marketing hype carefully crafted to enrich themselves at your expense. They seem to go into overdrive...

What are callable bonds? And what are the risk and return of callable bonds?

Date27 Oct 2014

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Q: What are callable bonds? And what are the risk and return of callable bonds? A: Callable bonds are fixed income securities that give the issuer the right, but not the obligation, to call in, or prepay, the bond prior to maturity. Issuers can be expected to exercise this right if they are able to...

Additional Thoughts on the Rising Glidepath Approach

Date13 Oct 2014

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Watch the video on Multifactor World.

Market Expectations for Interest Rate Increases

Date13 Oct 2014

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Q: Should you stay invested in the short term while waiting for interest rates to rise? A: First, other than very short-term interest rates that are heavily influenced by the Federal Reserve, it’s difficult to predict changes in interest rates. Second, to determine whether a short-term fixed income approach will be superior to an intermediate-term...

The Volatility Of Premiums

Date13 Oct 2014

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The stock premium, the annual average return of stocks minus the annual average return of one-month Treasury bills, has historically been high. This fact has, understandably, attracted investors to the stock market. For the period 1927-2013, the stock premium averaged 8.18 percent. There has also been a size premium (the return of small stocks minus...

British Documentary Skewers Active Management

Date13 Oct 2014

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A new multi-part British documentary, How to Win the Loser’s Game, takes a hard look at active management. Although done with typical understatement, the results are not pretty. The complete documentary will not be available until Nov. 5. But you can view the first three parts, produced by Sensible Investing, here. It should be required...

Debunking 8 Common Investing Myths

Date13 Oct 2014

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You don’t need to pick stocks or eschew all risk to be a good investor. Convenient truths vs. evidence-based investing It’s easy for investors to absorb myths on best investing practices from the media and financial pundits. That’s why it’s important to know the difference between well-researched advice and entertainment masquerading as financial news. Be...

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