Indexed and passive investing have gotten a bad rap from active managers out to protect their turf and the high fees they earn from buying and selling securities. Passive managers buy a portfolio that matches a market index or that covers an entire asset class. Plenty of academic research suggests that they will do better than the average active investor […]
Client Letter – Q1 2012
During the past quarter, U.S. and international stocks performed exceptionally well, with international and emerging markets doing the best (as they have during the last ten years). Ironically, U.S. stocks have outperformed international stocks during the last one year and five year periods. The following chart shows the 3-month, 5-year, and 10-year performance of many DFA funds (representing different asset […]
Client Letter – Q4 2011
Any investor should be willing to admit 2011 was a pretty crazy year for the markets. We were churned through the year by a weather and nuclear disaster in Japan, a deadlock over finances in Congress that led to a downgrade of U.S. debt, and a major crisis in Europe that threatened to blow apart the European Union and end […]
Famed mutual fund manager quits after fund ends its streak
He was described as “one of the greatest investors of our time” by Fortune magazine in 2006. His record of beating the Standard & Poor’s 500 Index for 15 years from 1991 through 2005 is unmatched. And yet his mutual fund—Legg Mason Value Trust—suffered poor returns over subsequent years, landing him in the bottom of the pack in 2010 out of 1,187 […]
Optimism from a top market observer
As the world’s stock markets took a vicious tumble in late summer and early fall, one of the market’s most prescient observers issued a warning: don’t sell now. Burton Malkiel, economics professor at Princeton and author of “A Random Walk Down Wall Street,” wrote an editorial in the Wall Street Journal urging investors to ignore the market’s recent trends and to focus on […]
Why you should keep investing in 2012 (and even up your ante)
Any investor should be willing to admit 2011 was a pretty crazy year for the markets. They were churned through the year by a weather and nuclear disaster in Japan, a deadlock over finances in Congress that led to a downgrade of U.S. debt, and a major crisis in Europe that threatened to blow apart the European Union and end […]
Client Letter – Q3 2011
During the past quarter, the world-wide equity markets took a steep fall. In contrast, our bond positions did their job and held up the “fort.” The chart below shows the 3-month, 5-year, and 10-year performance of many DFA funds (representing different asset classes) compared to the S&P 500 Index: Market Returns for the period ending September 30, 2011 DFA Fund […]
Client Letter – Q2 2011
As a fiduciary, we are required to utilize a due diligence process in selecting service providers, including the selection of custodians. We are also required to periodically re-evaluate these relationships. Sparrow Wealth Management clients have utilized Charles Schwab as your custodian for about ten years now. During the past year, we have evaluated a number of custodians, and we have […]
The virtues of buying and holding
Two of America’s eminent investment researchers were recently asked whether the hyperactive markets of the last few years indicate that the concept of buy-and-hold investing is outdated. Their answer? Absolutely not, reports the Journal of Indexes in its May-June issue. “Obviously, it would be much better if we knew when the market was going to go down 40 percent, and we could […]
Every investor’s choice: Be the dumb money or the smart money
Investors have a lot of choice when deciding how to handle market fluctuations. Many opt for “tactical asset allocation”—in other words, they move out of stocks, for example, when they think returns will be bad, and move back in when they expect better returns. Many others choose a better strategy—they spread their money among a bunch of different asset classes […]
