Many investors have a vague notion that “small” stocks and “value” stocks are something they should consider for their portfolios. Yet the average investor’s portfolio is often more “market-like,” that is, invested in big U.S. growth stocks. So where do value and small stocks fit in and why would an investor want them? The answer is very important for long-term […]
Investments
Supercharging an indexed portfolio
Let’s say you have made the breakthrough to indexed investing. You no longer believe that some swaggering Wall Street money manager can consistently beat the market for you. You no longer want to pay high fees to take that risk, and have decided on a more rational course. Great—you’ve come to the conclusion shared by a lot of other very […]
Some fund investors are paying extra sales fees
Over 150 mutual funds that are closed to new investors continue to charge extra fees for marketing, says Standard & Poor’s, an independent investment research firm. The notorious fees, known as the 12b-1 fee after the securities law section that regulates them, are supposed to be used by mutual fund companies to market their funds to the public. However, funds […]
Are Wall Street’s talking heads reliable?
Every day that the stock markets are open, a host of TV, radio and print sources tell us what the market is doing and, more importantly, claim to tell us why. Oh really? Is it that easy? CNBC and Bloomberg News and the market wrap programs on every radio show seem to make that claim. We hear one day that […]
Fund investigations: Should you sell now?
The mutual fund scandals keep coming at shell-shocked investors who wonder whether they should abandon the whole industry and put their money under a mattress. It all depends whether you own shares in funds of companies charged in the scandal. It is important to put the scary headlines in perspective. There are thousands and thousands of mutual funds. Only a […]
Are investors sharper than in 1911?
“One minor conclusion from all this data and experience is that the very small investor is the most inveterate bargain hunter in the world” It is the small investor who always wants 100 percent on his money and who is willing to take the most astounding chances to get it.” Does this magazine quote sound like the typical small investor today” […]
Too much company stock
You would think that after the horror stories about Enron employees who lost their job and their retirement savings more employees would diversify out of their own company’s stock. Not so, according to a recent survey by Hewitt Associates, a benefits consulting firm. It found that at the end of 2002 some 28% of all 401k plan money was invested […]
What do stock traders and lottery ticket buyers have in common?
Why do some investors trade stock frequently in the hope of getting rich, especially when it is easy to see that short-term trading is a losing proposition? The answer may be in comparing the behavior of frequent traders to that of buyers of lottery tickets, suggests Meir Statman, finance professor at Santa Clara University. A few years ago Statman coined […]
Predicting Warren Buffett: Lessons on hindsight
Billionaire investor and businessman Warren Buffett has built an enviable investment record through his management of Berkshire Hathaway Inc. From 1965, when he took over the publicly traded company, through late September the stock grew from $18 a share to $75,700, an increase of 4,204%. That is equivalent to an annualized growth rate of almost 25% per year, well in […]
An alternative: Small international stocks
Investment allocation theory teaches that a portfolio’s return and risk can be improved by adding more investments with low correlation to other portfolio investments. Investors who have suffered through the risks offered by the U.S. stock market in recent years apparently agree: There has been a large increase in interest in “alternative” investments, such as hedge funds, venture capital and […]
