As we age and gain experience we should get wiser, right? We’ve learned a lot from our mistakes and those of others and we gain a sense of calm and deliberation that we may not have had in our younger years. When it comes to finances this may be true only up to a point, the latest cognitive research shows. Research […]
Balanced portfolios are beating the hedge funds so far this year
The investment climate has been almost manic over the last year, with wild swings in global markets due to economic news and the financial crisis in Europe. At times like these some in the investment world argue that passive investors who sit on a diversified portfolio will get whipsawed. Instead, the argument goes, they should hand their money to an expert […]
Gold’s reputation as an inflation hedge is vastly overdone, study says
Gold has soared in popularity in recent years as a hedge against inflation and weak currencies. Unfortunately for the gold bugs, a new study shows it is neither. In fact, the only time period for which gold has served as an adequate inflation hedge was the last 2,000 years. Any holding of less than that did not hedge inflation, say investment […]
Do not go into retirement without addressing the risks
Retirement can be the most exciting and rewarding time of all, but, like any other stage in life, there are unique financial risks that need to be addressed. Longevity, inflation, health care needs, the death of a spouse, problems with living independently—all can affect a retiree’s quality of life. Changes in laws and social welfare programs can have dramatic effects on a […]
Knightmare on Wall Street
Question: Which of the following statements applies to last week’s stock market behavior? Computer errors at a major trading firm generated millions of faulty trades, causing dramatic and puzzling price swings in dozens of stocks Wednesday morning. A New York Times columnist fumed that “Wall Street has created its own Frankenstein. The machines are now in charge.” Stocks on the fifty-two-week new […]
Trying to avoid risk can be very costly
Some investors today are doing what worried investors always seem to do in times of stress—trying to avoid “risk” by buying the “safest” assets. In this case that has meant buying government bonds from the United States, Germany, Australia, the Netherlands, and other countries considered safe havens. Panic buying has pushed yields in some cases to negative levels, meaning investors […]
What will the presidential election do to the market?
Spoiler alert: You are about to hear what effects this year’s Presidential election may have on the U.S. stock market six months down the road. Are you ready? The answer is probably not much. That’s right: a hotly contested election pitting competing economic policies against each other in a time of world financial crisis probably will make little difference to […]
Client Letter – Q2 2012
During the past quarter, U.S. and international stocks were back in negative territory, with international and emerging markets down the most. This quarter had a negative impact on our one-year returns, leaving only the S&P 500 and real estate in positive territory for the year. The following chart shows the 1-year, 5-year, and 10-year performance of many DFA funds (representing […]
Public pension fund travails show that risk and fees matter
Some pension funds for state and local employees have sought higher risk investments in order to boost returns and make up for funding shortfalls. Others have stuck to a traditional diversified stock and bond mix. Guess who has done better? (Here’s a hint: it wasn’t the pension plans that took high risks). Falling tax revenues and rising retirement costs have […]
Gold disappoints over the long-term
Gold has been on a tear since 2000, but its long-term record of growth for individual investors is pretty poor. From the end of 1999 through 2011, gold beat most major equity asset classes, gaining an average of 12.3 percent per year, says Dimensional Fund Advisors, a large California-based investment firm. But the record since 1975, when individual U.S. investors […]
