Learning Center

Let Go of Irrational Fears

Date30 Nov 2015

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When we talk about the chances of something bad happening, people tend to fall into three general groups. ■The Numbers Don’t Matter No matter the odds, this group dismisses the statistics. People insist they can trust their gut. I suspect this group buys lottery tickets every week. Read the rest of the article on The...

Quick Take: What Is a Bond Ladder

Date30 Nov 2015

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Blerina Hysi, Fixed Income Portfolio Advisor, BAM Advisor Services Laddered bond portfolios can be customized to meet each investor’s unique needs. Plus, they help reduce the risk associated with investing in fixed income. Fixed Income Portfolio Advisor Blerina Hysi on the benefits of a well-structured bond ladder. Quick Take: What is a Bond Ladder from...

What Your Financial Advisor Needs to Know About Your Brain

Date30 Nov 2015

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Behavioral economist Richard Thaler explains why financial professionals need to be familiar with psychology. Daniel Kahneman and Amos Tversky legitimized behavioral economics—the study of how people really behave around money, as opposed to how economists say a rational person ought to behave. Then Richard Thaler and Cass Sunstein applied the lessons of behavioral economics to...

The S&P Active vs. Passive Scorecard: Global Evidence

Date30 Nov 2015

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While the debate over the merits of active versus passive investing is ongoing, there has been a very clear trend spanning several decades now showing that investors are slowly (but steadily) abandoning the hope of outperformance offered by active management in favor of the certainty of earning market returns (not average returns) offered by passive...

What are agency bonds?

Date30 Nov 2015

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Quick Take on Fixed Income November 2015 Question: What are agency bonds? Answer: Agency bonds are securities issued by two types of entities: 1) government-sponsored enterprises (GSEs), which usually are federally chartered but privately owned corporations; and 2) federal government agencies which issue bonds to finance activities related to public purposes, such as increasing home...

Dividends An Illogical Preference

Date30 Nov 2015

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A large body of literature examines whether managers of actively managed funds add value to their investors by generating abnormal returns. Unfortunately, not only do the vast majority fail to do so, but the evidence, as presented in my book, “The Incredible Shrinking Alpha,” demonstrates that the already-small percentage of managers able to beat their...

Valuation Metrics In Perspective

Date30 Nov 2015

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It’s well-established in the literature that valuation metrics—such as the dividend yield (D/P) and the earnings yield (E/P), as well as its cousin, the Shiller CAPE 10—provide important information in terms of future expected returns. In fact, these metrics are the best that investors have for predicting long-term equity results. For instance, the Shiller CAPE...

Required Reading for Investors

Date30 Nov 2015

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Jane Bryant Quinn, a highly regarded and nationally syndicated columnist, once called much of the output of Wall Street and the trade publications that cover financial markets “investment porn.” She summed it up this way: “Americans are indulging themselves in investment porn. Shameless stories about performance tickle our prurient financial interest.” The roller-coaster swing of...

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