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Genes, Experience Affect Choices

Date09 Nov 2015

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Are you a value investor or a growth investor? Could your preference be influenced by a biological predisposition partially ingrained from birth? Is it possible that your choice of investment could be explained by your personal experiences, both early on and later in life? The field of behavioral finance advances psychology-based theories to explain investor...

What qualifications are required for a municipal bond to meet our buying parameters?

Date09 Nov 2015

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Quick Take on Fixed Income November, 2015 Question: What qualifications are required for a municipal bond to meet our buying parameters? Answer: While there have been few defaults in the municipal market, it’s important to note that not all muni bonds are created equal. The market offers many different types of bonds backed by varying...

Misleading “Debates” on Active vs. Passive Harm Investors

Date09 Nov 2015

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While it’s a low bar, Bloomberg TV always seemed to me to be the best of the financial media. Its anchors are professional and knowledgeable. Its coverage is broad and responsible. It avoids the hype and sensationalism typical of many of its competitors. Bloomberg recently launched a new morning program, Bloomberg Go. It features some...

Index Funds Win Across Borders

Date02 Nov 2015

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Thanks to Standard and Poor’s Indices Versus Active (SPIVA) scorecard, investors are becoming ever-more aware both of the persistent underperformance of the vast majority of actively managed funds as well the lack of evidence showing any persistence among the minority of winners beyond the randomly expected. This increasing awareness has led to an inexorable trend...

For True Freedom, Learn to Deal With Uncertainty

Date02 Nov 2015

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Almost 10 years ago, I knew a guy on a financial rocket ship. He had a great house, a successful business and a solid income. But then things changed. With the benefit of hindsight, it was clear he bought a little too much house and spent a little too much money. At the beginning, he...

Keep Skewness In Perspective

Date02 Nov 2015

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Diego Amaya, Peter Christoffersen, Kris Jacobs and Aurelio Vasquez, authors of the new paper, “Does Realized Skewness Predict the Cross-Section of Equity Returns?”, examined higher moments of volatility, skewness and kurtosis to determine if they have provided incremental explanatory power in the cross section of stock returns. Before reviewing the authors’ findings, which appear in...

Collapsing Arguments for Conflicted Advice

Date02 Nov 2015

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I had an interesting experience recently. I gave a talk to a group of investors. In the audience were a few brokers. My presentation consisted of two basic points: 1. Send an email to your broker or financial advisor and ask them simply to confirm that they will always put your interests above their own...

Hedge Funds Dropping Like Flies

Date02 Nov 2015

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Fortress Investment Group is closing its flagship hedge fund following heavy losses and investor withdrawals. The fund, which had managed more than $8 billion in 2007, saw its assets fall to $3.2 billion at the start of 2015 and then again to just $1.6 billion at the time of this week’s announcement. Fortress’s fund, which...

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