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Talking Dollars Makes Sense

Date29 Sep 2014

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It’s not easy having conversations about money. Carl Richards, director of investor education for the BAM ALLIANCE, says they can “leave us feeling confused, misunderstood, and even angry.” That doesn’t mean you are better off not having these talks. In his book, “The Behavior Gap: Simple Ways to Stop Doing Dumb Things With Money,” Carl writes...

An Analytical Evaluation of Rising Glidepath Claims

Date29 Sep 2014

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Last year, a piece by Michael Kitces and Wade Pfau made the claim that mechanically increasing the equity allocation during retirement — which they term a “rising glidepath” — could reduce the likelihood that a retiree outlives his or her assets and could decrease the magnitude of shortfall when capital market returns disappoint. Specifically, the...

Investing Against the Odds, and the Facts

Date29 Sep 2014

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Earlier this summer, I was on a hike with a friend and mentioned that while we’d started at about 9,000 feet, we’d reach an elevation of 12,000 feet by the end of the trail. My friend replied, “That’s a fact I just don’t believe.” Yes, it sounds silly, and of course, we laughed about it....

Boomer Esiason’s Advice For Millennials: Plan For Tomorrow, Live For Today

Date29 Sep 2014

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Boomer Esiason is busy—I mean, really busy. “Starting next Tuesday, all the way until after the Super Bowl in 2015, I think I’ve got about four days off,” he told me. Why, then, was he anxious to talk about financial planning and life insurance? It’s because he has a message for today’s youth: “Protect your...

Forecasters Persistently Fail Us

Date29 Sep 2014

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A large majority of investors have seen their portfolios underperform simple buy-and-hold strategies, despite having followed the stock-picking and market-timing advice of so-called experts. These “experts” include pundits, gurus and forecasters such as Bill Gross, John Hussman, Nouriel Roubini, Meredith Whitney and, yes, even Jim Cramer. Investors confronting subpar returns are left wondering, “What went...

Why Some Anomalies Persist

Date29 Sep 2014

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The academic literature is filled with challenges to the efficient markets hypothesis. Perhaps the greatest among these challenges involves the existence of momentum and the poor performance of small-growth stocks and high-beta stocks. Beta is defined as the measure of the systematic risk of a security or a portfolio in comparison to the market as...

Here’s the latest failing grade for active funds

Date29 Sep 2014

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No one has a clear crystal ball allowing them to accurately forecast the future. So, it’s a good thing that predicting the results of Standard & Poor’s twice-yearly active-versus-passive scorecard doesn’t seem to require one. It’s a pretty safe bet that the results in each new scorecard — officially called the S&P Indices Versus Active...

This Is Your Single Biggest Investment Mistake

Date29 Sep 2014

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Research shows these funds are not producing enough returns to cover trading and operating expenses. I’m not going to make you wait for the punch line. Your single biggest investment mistake is owning any actively managed funds. That’s where the fund manager, through stock picking and market timing, attempts to beat the returns of a...

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