Learning Center

A Bold Way to Pick Winners

Date23 May 2016

Comment0

It’s a mystery to me why so many investors pay brokers to pick “winning” mutual funds. But they do, and it turns out that they aren’t alone in this often fruitless quest. Pension funds pay obscene fees to “consultants” who claim the ability to select outperforming mutual funds or other types of investments. A flawed process The...

Annuities and Problems of Longevity

Date23 May 2016

Comment0

As the director of research for The BAM ALLIANCE, I frequently receive questions related to the advisability of purchasing payout annuities (as opposed to variable annuities, which I generally categorize as products meant to be sold, not bought). Combine the relatively poor performance of equities since 2000 (the S&P 500 returned just a little more...

Why Alt Funds Underperform

Date23 May 2016

Comment0

The financial crisis of 2008, when all risky asset classes suffered dramatic losses, led many investors to seek out “alternative” investments that claimed to provide downside protection, or positive returns independent of the market environment. This resulted in the introduction of a new segment of mutual funds that operate at the intersection of traditional mutual...

CAPE 10 Ratio In Need Of Context

Date09 May 2016

Comment0

The Shiller cyclically adjusted (for inflation) price-to-earnings ratio—referred to as the CAPE 10 because it averages the last 10 years’ earnings and adjusts them for inflation—is a metric used by many to determine whether the market is undervalued, fairly valued or overvalued. Employing a 10-year average for earnings, instead of the most current 12-month earnings,...

No Big Edge For More-Active Funds

Date09 May 2016

Comment0

The prevailing wisdom is that the market for equities in emerging markets is less efficient than in developed markets. Unfortunately, the evidence doesn’t support this hypothesis. For instance, the S&P Indices Versus Active (SPIVA) scorecard showed that over the 10-year period ending June 2015, 92% of actively managed emerging market funds underperformed their benchmark, the...

Honesty Tops Any Checklist When Looking for an Adviser

Date09 May 2016

Comment0

Now that more financial professionals are going to have to act in their customer’s best interest, where can you actually find someone who will really, truly, for sure do that? It seems like a simple question, but it’s not. I’ve been around the financial planning industry for 20 years, and one of the hardest (and...

Passive Investing Without Indexes

Date09 May 2016

Comment0

Most investors believe all passively managed funds within the same asset class should have the same, or at least very similar, returns. However, while all index funds and passive structured asset class funds are similar in the way that rectangles and squares are similar, they are also very different. All squares are rectangles, but not...

The Solution to Maintaining a Budget Is Awareness

Date09 May 2016

Comment0

I talk to many people who have problems with spending. Sometimes it’s friends. Sometimes it’s co-workers. Sometimes it’s neighbors. And yes, sometimes I talk to myself about my own struggles. What I’ve discovered over the years is that most of our problems do not come down to income. Instead, we don’t notice enough. Spending mindlessly,...

Learning Center

Categories