A long-held axiom among professional investors says that diversifying a portfolio by adding international stocks helps to reduce risk and enhance returns. But as the world’s developed economies in Asia and Europe have become more tightly entwined, critics have argued that global investing’s allure has declined because stock market patterns in major markets have converged. Rex Sinquefield, who helped develop […]
Market historians say this bull market is for real and will last
Stock markets worldwide have been rallying for nearly two years now. The Standard & Poor’s 500 Index hit a low of 676 on March 9, 2009 and has risen ever since. In late February it was in the 1330 range. Yet the average investor doesn’t seem to trust the trend, and plenty of professionals are skeptical as well. Worries over […]
Client Letter – Q4 2010
Over the past year, worldwide markets continued the strong recovery that started in 2009. US stocks turned in pleasing results with investors earning significant rewards for the equity, small cap and value risk factors. But capturing the market rate of return required plenty of patience: eight months into the year, the S&P 500 Index was still down 5.8% and the […]
Client Letter – Q3 2010
During the past quarter, we have witnessed an amazing 3-month rebound, in stark contrast to what happened in the prior quarter. In fact, the month of September will go down in history as the strongest September since 1939. The following chart shows the 3-month, 5-year, and 10-year performance of many DFA funds (representing different asset classes) compared to the S&P […]
Investing based on recent trends is an invitation to disappointment
As decision makers we spend a lot of time wallowing in the past. We project recent trends forward, expecting things will pretty much go on as they have been. Unfortunately, this tendency, termed “recency bias” by cognitive psychology, often does not give you a good guide to the future. Nowhere is this more true than in the investment markets. Here […]
Offered a high yield? Run the other way
Low interest rates at the bank and scary volatility in investment markets has created a market for shady high yield investment programs (HYIPs) that prey on unsophisticated investors, warns the Financial Industry Regulatory Authority, which regulates U.S.securities firms. If you or someone you know are offered a high yield investment that claims to provide safety, liquidity, and above-market interest rates, […]
Investors expect too much of brokers and insurance agents
Three of four investors have unrealistic expectations of the level of care that financial advisors at brokerage firms are required to give. Seventy-six percent of investors said “financial advisors” at firms such as Merrill Lynch and UBS should put the client’s interests first, found a survey conducted by several consumer organizations. However, brokers do not have a fiduciary duty to […]
With interest rates so low, where do you put cash now?
Savers have been frustrated by super-low short-term interest rates since the 2008 financial crisis forced central banks worldwide to slash rates. Despite forecasts that government stimulus spending and rising national deficits would spark inflation and higher rates, inflation and interest rates have remained stubbornly low. What is a saver who wants a decent interest rate to do? The chart of […]
It’s a great time to buy stocks, says noted financial historian
One of this country’s preeminent financial economists and historians believes the stock market is a great buy today. In fact, when compared to similar periods over the last 200 years of stock market history, all of the unsettling events of recent years have contributed to the market’s positive prospects, says Jeremy J. Siegel of the Wharton School and author of […]
Client Letter – Q2 2010
During the past quarter, global stock markets ended their year-long rally and experienced their first major correction since the crash of 2008. Despite strong corporate earnings reports, global investors reacted to the European debacle, the Gulf oil spill, Goldman’s troubles with the SEC, and worries about a possible double-dip recession. The following chart shows the 3-month, 5-year, and 10-year performance […]
