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Active Funds Whiff Again

Date04 Apr 2016

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The year-end 2015 S&P Active Versus Passive (SPIVA) scorecard provides yet another example of why—at least when it comes to the overall results of active management relative to appropriate benchmarks—the past is in fact prologue. Following are some highlights from the recently released report: Domestic Equities Last year, 66.1% of large-cap managers, 56.8% of midcap...

Don’t Bother Timing Premiums

Date04 Apr 2016

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Because of the magnitude, persistence, pervasiveness and robustness of their related premiums, several factors have dominated the academic literature. Among them are market beta, size, value, momentum and profitability. However, despite their persistence, each factor has undergone even fairly long periods during which it produced negative returns. Said another way, while investors can raise expected...

Testing The Beta Premise

Date04 Apr 2016

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One of the most important issues in finance concerns the relationship between risk and expected return. John Lintner, William Sharpe and Jack Treynor are generally given most of the credit for introducing the first formal asset pricing model, the capital asset pricing model (CAPM), which was developed in the early 1960s. The CAPM provided the...

Are You Living The Life You Chose?

Date04 Apr 2016

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I love finding financial wisdom in unlikely places, like in art and music. These opportunities are more abundant than you might expect. For instance, the punk-Americana outfit, The Avett Brothers, dedicated an entire tune, aptly titled “Ill With Want,” to the scourge of greed and Mumford & Sons taught us that “where you invest your...

3 steps to avoid running out of money in retirement

Date04 Apr 2016

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The majority of Americans don’t think they are saving enough and are worried their savings won’t last as long as they do. Only 31 percent of workers who participate in an employer-sponsored retirement plan, such as a 401(k), 403(b) or 457, are “extremely confident” or “very confident” that they will not outlive their money —...

When Trading Detracts From Alpha

Date04 Apr 2016

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As explained in my latest book, “The Incredible Shrinking Alpha,” which I co-authored with Andrew Berkin, accompanying the rapid growth of the actively managed mutual fund industry, the average performance of mutual funds has been trending downward over the past few decades. Teodor Dyakov, Hao Jiang and Marno Verbeek—authors of the study “The Trading Performance...

The Benefits of Getting an Icy Start to the Day

Date04 Apr 2016

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It’s 6 a.m. in Park City, Utah. I’m in the shower. I go through all the typical shower rituals — I wash behind my ears, shave, and more — until I’m ready to get out. I grab the handle for the water, pause, take a deep breath and then turn it. I don’t turn it...

Why You Need To Put the Personal in Your Personal Finances

Date21 Mar 2016

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Tim Maurer, a Charleston, S.C.-based Certified Financial Planner and Forbes contributor who just wrote the book Simple Money: A No-Nonsense Guide to Personal Finance has an enlightening, if unconventional notion. To Maurer, personal finance is more personal than finance. “As I looked at the landscape of personal finance books, there is almost a shtick they...

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