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‘Value’ Fueled By Behavior Bias

Date27 May 2014

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The financial equivalent of the Miller Lite, “tastes great, less filling,” debate is between traditional finance (which uses risk theories to explain asset pricing), and the newer behavioral finance field (which uses human behavior to provide the explanations). Unfortunately, there’s no consensus about which side of the debate is correct. My own view is that...

A Risk-free Investment With High Expected Returns

Date27 May 2014

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For much of the past decade, I have been on a mission to persuade you to fundamentally change the way you invest. It’s my firmly held view that the road to financial perdition begins with a call to a broker or adviser who claims to be able to “beat the markets.” I am not alone...

The Scarcity Fallacy: Is Less Really More?

Date27 May 2014

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Having the privilege of walking through life with people vocationally, aiding in the acquisition, maintenance and dispossession of earthly resources as a financial advisor, I’m burdened with a heightened sense of the battling spirits of scarcity and abundance. The dehumanizing poverty that torments the Majority World screams that resources—here and now—are scarce. Remembering when I handed...

A Slow-Tech Approach to Tracking Spending

Date27 May 2014

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Ten years ago, I tracked every penny of our family’s spending. That’s good, right? Over time, however, I lost sight of why I was doing it and eventually stopped. Recently, I decided to try it again, and I find myself having the same mental conversation every time I sit down with my receipts. “I don’t...

Quick Take on Fixed Income

Date27 May 2014

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Q: What are the benefits of buying higher coupon bonds? A: A higher coupon or “premium” bond has a higher coupon rate than the current market interest rate and will trade above par. These bonds sell for more than 100 percent of their par value, so the dollar value is greater than the normal $1,000....

Should You Include International Bonds In Your Portfolio? – Part II

Date20 May 2014

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Today we continue our discussion on international bonds. We’ll begin with a Vanguard study. Vanguard reached the same conclusions we discussed in yesterday’s post in their February 2014 research paper “Global fixed income: Considerations for U.S. Investors.” The paper states: For the average investor seeking to further mitigate volatility in a diversified portfolio, foreign bonds can play...

Should You Include International Bonds In Your Portfolio? – Part I

Date20 May 2014

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Today begins a two-part series on international bonds and whether or not they belong in your portfolio. Broad diversification of risk is one of the prudent rules of investing – since it’s the only free lunch in investing, you might as well eat as much of it as you can. For equity investors, an important...

Should People Listen To John Hussman’s Forecasts?

Date20 May 2014

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In my book, Think, Act, and Invest Like Warren Buffett, I noted that the Oracle of Omaha advised investors: “We have long felt that the only value of stock forecasters is to make fortune-tellers look good. Even now, Charlie (Munger) and I continue to believe that short-term market forecasts are poison and should be kept locked up...

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