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Learning to Shun the Instagram Life

Date18 Aug 2014

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“We should just move to the country and live in a tent.” I mention this idea to my wife every time I’m confronted with one of the realities of living in Park City, Utah. It seems like almost everyone here is an athlete of some sort, and they take their sports seriously. From mountain biking...

Americans Are Bad at Math, but It’s Not Too Late to Fix

Date18 Aug 2014

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When I lived in Las Vegas, there were billboards everywhere advertising different casinos. One of the most common was the type that promised “98 percent payouts.” I remember thinking how amazing that was. After all, 98 is a lot of percents! It seemed like a really good deal — until I thought about it for...

Small Value Funds Not Equal, Part II

Date18 Aug 2014

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Smart investors begin their journey by developing an investment plan, or investment policy statement, that includes an asset allocation table. After the plan has been prepared, the next step is to select proper investment vehicles for providing the appropriate exposure to the desired asset classes. A common error among investors who follow a “passive” investment...

Listen to Your Brain to Sense a Market Correction

Date11 Aug 2014

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The financial media continues to stoke anxiety and fear — and trading — with “news” about a coming market correction. On its list of “must reads” for July 16, Yahoo Finance featured these articles: “Investors haven’t been this optimistic since 1987. Here’s why that’s bad.” “This could be a big problem for stocks.” Sometimes these...

How to Be Happier in Retirement

Date11 Aug 2014

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Much of what is written about retirement planning focuses on investing. I am guilty of contributing to the volume of that literature. My book, “The Smartest Retirement Book You’ll Ever Read,” discusses how to invest intelligently so that you can retire with dignity. I certainly don’t mean to trivialize the importance of careful financial planning. Without such...

Is ‘Momentum’ Faltering? Part I

Date11 Aug 2014

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For the decade from 2004-2013, the momentum premium—as measured by the Fama-French momentum factor—experienced a negative compound return of -1.2 percent per year. (This number was calculated using the monthly momentum premium figures from the Fama-French data series. Note that returns on factors are generally expressed as annual averages, not annualized returns, and during this decade...

Avoid this mistake about global diversification

Date11 Aug 2014

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Don’t get stuck in your own backyard. Investors should consider building globally diversified equity portfolios that avoid the persistent and worldwide phenomenon of home-country bias. That’s when you allocate a greater weight to your home-country stocks than their percentage of total global market capitalization. Among the reasons investors around the world exhibit this bias is...

Is ‘Momentum’ Faltering? Part II

Date11 Aug 2014

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Earlier this week, we took a look at some of the historical evidence on the persistence of the Fama-French momentum factor. Today we’ll examine the momentum premium’s out-of-sample record, as well as its uses in portfolio diversification. The authors of the 2013 study, “212 Years of Price Momentum,” concluded that the most recent decade-long underperformance...

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