The midyear 2015 Standard & Poor’s Indices Versus Active (SPIVA) persistence scorecard for U.S. equity markets provides yet another example of why—at least when it comes to the overall results of active management relative to their appropriate benchmarks—the past can, in fact, be considered prologue. Here are some of the highlights from the report: Of…
When we think of mountain climbing, we tend to think of Mount Everest and big groups of people climbing in long lines. Armies of Sherpas create base camps and ferry supplies and gear up and down the mountain. Miles of rope anchored to the mountainside helps climbers reach the top. For a very long time,…
A good number of Wall Street “gurus” have, for quite some time now, been loudly and repeatedly warning investors that bond yields will soar. That, they caution, will in turn lead to falling stock prices. Unfortunately, this bit of “conventional wisdom” regarding the relationship between stocks and bonds may have led many investors to panic…
Where am I now? Where do I want to go from here? At the start of each year, many of us make it a habit to ask ourselves the two above questions. The answers help us map out a strategy, make resolutions and set goals. This annual exercise offers us the opportunity to take stock…
More than a decade ago, I learned how to kayak. I practiced in the pool a few times before deciding to test my skills on the river. For one of my first trips, my wife and I traveled to the Snake River just below Jackson Hole, Wyo. We planned to paddle a stretch of the…
“You don’t really do this stuff—do you?” The question came from a major network anchor after the camera stopped rolling. The topic was budgeting. He certainly isn’t obtuse, and he wasn’t being patronizing or condescending. It was a legitimate question that accurately reflects the underlying perception held by most people in any demographic–that budgeting is…
In this installment of our continuing series on the ability of actively managed fund families to generate alpha, we’ll evaluate the recent performance of equity funds managed by Neuberger Berman to determine if the firm adds value for its investors. Regardless of whether it actually delivers on its promise, it seems Neuberger Berman’s “active, risk-disciplined…
The headline of a May article in Investment News, authored by senior columnist Jeff Benjamin, declares: “When investing in emerging-markets economies, stock picking beats indexed exposure.” As regular readers of my work will most likely not be shocked to discover, this assertion doesn’t reflect my own thoughts, nor is it supported by the historical evidence….
The battle over a rule proposed by the U.S. Department of Labor, which would require retirement plan advisors to be fiduciaries to plan participants, has descended to a new low. The securities industry lobby has been earning its keep, persuading some members of Congress that putting the interest of plan participants first is actually a…
Conventional wisdom can be defined as ideas so ingrained in our belief system that they are accepted without challenge. Unfortunately, much of the conventional wisdom about investing is incorrect. For example, the conventional wisdom that investors seeking high returns should invest in countries forecasted to produce high rates of economic growth—such as India and China—is…
For most people the “B-Word” (budgeting) conjures up feelings of deprivation and self-denial. As such, when it comes to deciding how to allocate your hard-earned cash, I far prefer a concept I call “joy-based spending” to traditional budgeting. Here’s how it works. Instead of telling yourself all the things you shouldn’t spend money on, you…
One of the more common investment mistakes that individual investors—and sometimes even professional advisors—make when they’re developing a comprehensive financial plan is failing to account for important nonfinancial assets. Financial assets are easily observable and typically liquid. Thus, they’re often the center of attention. On the other hand, assets such as labor capital (the mortality-weighted…
I think just about the worst financial advice you can give to a recent college graduate is: “Buy stocks in companies whose products and services you like.” On the surface, advice to “buy what you know” is well-intentioned. After all, saving and investing early and often helps a young investor harness the amazing power of…
The effect of high-frequency trading on market quality has generated strong interest among academics, investors and regulators alike. To further explore the impact high-frequency trading can have on the markets, Jennifer Conrad, Sunil Wahal and Jin Xiang—authors of the study “High Frequency Quoting, Trading, and the Efficiency of Prices”—conducted two types of tests: (a) unconditional…
It’s no wonder that you are confused. The financial media inundates investors every day with a barrage of irrelevant — and often misleading — information. You might think every conceivable question about investing has been fully explored by now and that the answers to the majority of inquiries would be obvious. Not true. Here are…