Yet another study comparing the returns of active and indexed mutual funds has named indexed funds as the clear winners. The study of active mutual funds showed that over a 10-year period ending in 2003, active funds underperformed their benchmark indexes by three to one. The poor results were not limited to large stocks, moreover: funds in every stock size […]
Client Letter – Q4 2004
Happy New Year! We had another excellent year and I think you will be pleased with the results. Our diversification into such areas as real estate, small stocks, international stocks, and emerging markets stocks and bonds was very profitable in 2004. Returns in those areas beat the U.S. stock market, as measured by the Standard & Poor’s 500 Index. The […]
Consumers face an alarming credit card crisis
In 1949 a New York businessman who was dining out was about to pay for his meal but was embarrassed to find he had left his wallet at home. The next year he started Diners Club, which allowed wealthy New Yorkers to pay for meals on credit with a cardboard card. Thus the credit card was born. It took another […]
Protect your financial identity and avoid theft
In this day and age of computers and credit cards and information databases, it is almost becoming a question of when, not whether, you will become a victim of identity theft. The Federal Trade Commission says 27.3 million Americans were victims of identity thieves in the five years through 2003. “For several years we have been seeing anecdotal evidence that […]
Client Letter – Q3 2004
So what’s going to happen to the market after the election? That question seems to be on the minds of many individual investors these days. The implications are that the market will be affected by the election and in a different way depending on which party lands on Pennsylvania Avenue. More importantly, the investor who asks this question is also […]
Bonds prove that common wisdom can be wrong
Earlier this year a rash of news stories and market commentaries warned investors about a coming decline in the bond market. The Federal Reserve had all but guaranteed it would begin raising interest rates for the first time in four years in order to head off incipient inflation. Rising rates are bad for bonds: their prices fall. The general wisdom […]
Take a random walk down Wall Street
Our analysts will uncover the best stocks to buy. The chart on that stock forecasts a breakout to new highs. Our mutual fund beats the market because our manager is really, really smart. Sure, and the check is in the mail. It is simply amazing that 40-plus years after academic investment researchers began poking holes in Wall Street’s unsupported claims […]
Avoid dangerous investor mistakes
Investment research has long shown that an investor does best by holding investments in a variety of different assets whose returns are not closely correlated. This type of investing, known as “asset class investing,” has plenty of support in academic research and in practice. In general, a well-diversified asset-class portfolio behaves in a more stable fashion over time and, given […]
Death is a certainty, but many do not plan for it
Every living American will die, but more than half of them have not made adequate—or even any—preparations for that inevitable event. A recent survey by Lawyers.com found that about 60% of Americans do not even have a basic will. In addition, about 70% do not have a living will or health care directive. Only 27% have a medical proxy and […]
Client Letter – Q2 2004
Much of Wall Street and the financial media are geared up to get you to make investment moves. “Buy, sell, trade, exchange, invest,” are among the verbs they shout at you every day. Few tell you that it is probably better to do little or nothing once you have set up a diversified investment portfolio. Consider this: Assume you invested […]
