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Spend the Money for the Good Boots, and Wear Them Forever

Date29 Feb 2016

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I like buying high-quality things. And for the longest time, I’ve had this sneaking suspicion that buying high-quality stuff, which perhaps initially was more expensive, actually saved me money in the long run. It wasn’t until very recently, though, that I noticed a strong argument in support of my hunch. The other day, I was...

Accepting the Uncertainty of Our Financial Life

Date29 Feb 2016

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I have a friend who is an emergency room physician in Salt Lake City. The other day, he described to me an interaction he had with a distressed, uncomfortable patient. After doing all the tests he could and finding nothing wrong, all he could do was give the patient that age-old, wonderful doctor advice: “Go...

Arbitrage Limits Cause Mispricing

Date29 Feb 2016

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Recent research on equities has found that, in contrast to classical economic theory, the term-structure of stock returns is downward-sloping. Stocks with low cash-flow duration earn higher returns than longer-duration stocks. The duration of equities is defined as the weighted average time to maturity of cash flows. It comes from summing up discounted cash flows...

Make Your Retirement Money Last

Date29 Feb 2016

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Whether you are planning to retire, or are already retired, Jane Bryant Quinn’s “How to Make Your Money Last: The Indispensable Retirement Guide” is one of the best “investments” you can make. Ms. Quinn is one of the leading journalists in personal finance. She clearly cares very deeply about helping investors find the right answers...

News Floating-Rate Note Funds: Too Good to Be True?

Date29 Feb 2016

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Every time interest rates are low, investors begin to make mistakes. They tend to engage in activities that they otherwise wouldn’t undertake—such as stretching for yield by taking on credit risk—if rates were at more “normal” levels like 4% or 5%. With Treasury yields having been at extremely low levels for seven years now, and...

The Biggest Market Myth

Date29 Feb 2016

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Particularly in times of extreme volatility, pundits come out of the woodwork to “explain” to the rest of us the reasons underlying the rise or fall of the stock market. For example, how many times have you seen articles attributing recent market declines to a drop in oil prices? I suspect if you polled investors,...

Gurus’ “Sure Things” For 2016

Date22 Feb 2016

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Every year, I like to keep track of the predictions that “gurus” and other market observers make for the upcoming year, specifically the ones that they say are “sure things.” It seems like no one in the financial media holds them accountable (which is a shame, since the evidence shows there are no good forecasters),...

Upcoming SEC-mandated changes to money market funds

Date22 Feb 2016

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Quick Take on Fixed Income February 2016 Q: What are the upcoming SEC-mandated changes to money market funds, and what impact will they have? A: In 2014, the Securities and Exchange Commission released new rules governing the operation of money market funds that will go into effect by October 2016. The biggest changes pertain to...

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