Last week, we discussed the first three of a total 12 lessons that the markets taught us in 2014 about prudent investment strategies. Today we’ll cover lessons Nos. 4 through 6. Many of these lessons appear year after year. But a lot of investors simply fail to learn from them, and instead repeat the same…
In an article on Jan. 9, Wall Street Journal columnist Jason Zweig recommended that investors purchase more Treasury Inflation-Protected Securities (TIPS). That article, and Zweig’s recommendation, has resulted in a lot of questions from both clients and advisors. So I thought I would provide some analysis to help investors make that decision. We’ll begin by…
I like to keep track of the financial forecasts people make for an upcoming year, especially the ones that gain consensus as “sure things.” Sometimes it seems like too few are willing to hold the financial media—or the “gurus” who appear in it—accountable for their predictions, which is a shame. The critical point to remember,…
What if there were a guaranteed way to lock-in today’s tuition rates at a diverse group of more than 275 private colleges across the country, for up to 30 years? This could end up being a very significant benefit. According to data compiled by the College Board, the cost of attending a private, nonprofit, four-year…
I live in a part of the country where we take skiing pretty seriously. It’s common for people to ski a few times a week since there are three great resorts right in our town. Our family is no exception. We ski a lot, but as my wife and I have gotten older, we discovered…
Q: Are you aware of the hidden costs in municipal bonds? A: A markup is the difference between the price paid by a broker/dealer and the price a bond was sold to a client. Broker/dealers are permitted to charge fair and reasonable markups on bonds. Unfortunately, these markups do not have to be disclosed to…
Once you’ve abandoned the pursuit of balancing money and life in favor of integrating the two, the question still remains: Now what? How the heck do I better integrate money and life? Like most personal finance dilemmas, the answer is simple, but not easy. It’s simple because it doesn’t require many steps. What’s more, it’s advice you’ve likely heard before, perhaps multiple…
Recently, I heard Nobel Prize-winner and finance professor Eugene Fama define “active management” as any fund that engages in security selection and/or market timing. And actively managed funds are fairly easy to identify. As we know, the term “passively managed” is used to describe the opposite of actively managed. But what, exactly, is meant by…
“We’re just overwhelmed with life.” That was my response to an attorney looking for insight into the obstacles facing Generation X. I’d referred a number of 30- and 40-something financial-planning clients to this attorney. All were in need of estate-planning documents. But he came to me concerned about the difficulty he was having in reconnecting…
If I ask, “How are you today?” I already have a good idea what you’ll say. “Busy.” We’re all busy. It’s reached the point that many of us wear our busyness like a badge of honor. And what better way to measure our busyness than with lists and numbers. Did the children learn a new…
The important economic role played by short-sellers has received increasing academic attention in recent years. The research has demonstrated that short-sellers, as a group, are key market intermediaries that improve the informational efficiency of prices, increase market liquidity and, by doing so, help lower overall country-level costs of capital. In addition, temporary short-selling bans have…
Investing is often made more complicated than necessary by the financial media and the self-styled “experts” featured in its coverage. So maybe it’s not surprising that, for many investors, bonds are a commonly misunderstood subject, because they really are even more technical and confusing than stocks. Investors have many choices when deciding how to invest…
An article I wrote in September discussed the findings of the study, “Benchmarks as Limits to Arbitrage: Understanding the Low-Volatility Anomaly,” in which the authors proposed a new explanation for why anomalies (such as the low-beta/low-volatility anomaly) persist. They hypothesized that the typical institutional investor’s mandate to maximize the ratio of excess returns relative to…
Retain more of your investment income with savvy tax planning. Good investors are good tax planners. Tax planning isn’t as fun as investing – or fun at all – but it helps you keep as much of that hard-won investment income as possible. Dan Solin, a wealth advisor with Buckingham and director of investor advocacy…
There are a number of well-documented anomalies that cause problems for the efficient markets hypothesis (EMH). These problems arise because the EMH assumes any mispricing in the market will be arbitraged away by rational traders who buy relatively undervalued assets and sell relatively overvalued ones. Among the biggest problems are the existence of momentum and…