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Accessing the Profitability Factor

Date13 May 2014

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A June 2012 study by Robert Novy-Marx, “The Other Side of Value: The Gross Profitability Premium,” provides investors with new insights into the cross section of stock returns. Among the important findings were: Profitability, as measured by gross profits-to-assets—gross profits being sales minus cost of goods sold—has roughly the same power as book-to-market (a value...

4 Alternatives to Reverse Mortgages

Date13 May 2014

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You may be all too familiar with commercials featuring folksy celebrities explaining how everyone tells him that reverse mortgages sound “too good to be true,” but there isn’t a catch this time. You can have the best of both worlds: You can stay in your home and get cash for the equity you have built...

Investors Should Look Out for Conflicts of Interest

Date13 May 2014

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In his new book, “Negotiating Your Investments,” Steven G. Blum discusses some of the traps investors confront when they seek financial advice. This book contains a wealth of helpful information, but I am going to focus on two areas of particular interest: conflicts of interest and asymmetric information. They are inextricably intertwined and present formidable...

A Tale of Two Investors

Date13 May 2014

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This is a tale of two fictional investors, Paul and Mary. They approach investing very differently. I suspect you will be able to identify with one of them, and perhaps learn something from both. Both Paul and Mary are deeply troubled by market volatility. They are still scarred by the market crash in 2008-2009. They...

The Illogic of Active Trading

Date13 May 2014

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Individual investors have been busy the last few months. TD Ameritrade saw a 30 percent jump in daily trading volume compared with the same period last year. Other discount brokers reported a similar increase in daily trading volume. I spoke to TD Ameritrade, and it said this number represented a broad-based increase in trading. The number of...

Seven Tips for Stock Traders Determined to Defy the Odds

Date13 May 2014

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Last week, I wrote about the documented evidence that trading activity results in lower returns to investors. This is equally true for those people we think of as professional investors and for people day trading in their parents’ basements. As far as I’m aware, there’s no peer-reviewed, academic study that shows any evidence that active trading will...

From the Sharpie of Carl Richards: Happiness While on Vacation

Date13 May 2014

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When it comes to vacation planning, many vacationers tend to forget the planning part. Carl Richards, director of investor education for the BAM ALLIANCE, writes the “Sketch Guy” column for The New York Times. He offers a two-step process for planning for not only your vacation but for your happier vacation: “First, pick your trip,...

Travel Lessons

Date13 May 2014

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Overview: A typical vacation planning checklist is bound to include the usual considerations: booking a rental car, making hotel reservations and testing how much can really fit into that carry-on luggage. But not as many travelers consider what they would do if a health crisis were to occur on their trip. Following is advice on...

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