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Learning Center

Is it OK to keep your assets with one fund family?

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One of the more frequently asked questions I get is about the need to diversify across mutual fund or exchange-traded fund providers: Is there risk in having all your eggs in one fund family’s basket? This question became even more prevalent after the Bernie Madoff fraud was exposed. We’ll begin to address this issue by...

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‘Value’ Fueled By Behavior Bias

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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...

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Rethinking Dividend Strategies

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During bear markets, the dividends thrown off by companies provide the cash flow required, while a total-return approach requires one to sell shares to provide the cash flow—a clear advantage of dividend-focused strategies that those who favor them are quick to point out. This blog addresses that issue specifically. We’ll begin our discussion by pointing...

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Is The Stock Market ‘Overgrazed’?

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There’s an interesting new paper by Claude Erb, “Has the Stock Market Been Overgrazed?” He begins with noting that over time (since the 1920s), the beta, size and value premiums have all declined. He then asks: “What if too many investors are demanding too much from a possibly limited supply of opportunities?” Said another way,...

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How the mutual fund graveyard can hurt investors

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The tendency for mutual fund companies to drop poorly performing funds when calculating historical return data is a major problem for unsuspecting investors, and it’s known as survivorship bias. An investor selecting mutual funds today is choosing from a list that excludes the losers that have been either closed or merged out of existence so...

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Avoid Supporting Your Fund Manager’s Lavish Lifestyle

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Some things never change. In 1940, Fred Schwed wrote a humorous book called, “Where Are the Customers’ Yachts?” It was about the dichotomy between the lavish lifestyle of those who manage money and the far less glamorous struggles of those whose money is being managed. In 2006, Paul Farrell noted in a MarketWatch blog post that more...

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A Risk-free Investment With High Expected Returns

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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...

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The Scarcity Fallacy: Is Less Really More?

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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...

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