Monthly Archives: September 2010

Is Indexing the Answer to Herd Investing?

That investors buy at the top and sell at the bottom is a sad truth that has been well-established as typical financial behavior. A column in today’s Wall Street Journal raises the question: what should investors do about that?

The usual answer is to argue for indexing — if we “can’t” beat the market, we might as well join it. But the Journal’s Brett Arends says the better answer is to bet against the herd: when the market is going up, get out. When it’s going down, buy. Continue reading

Global Debt Maps: The Economist

Two more images that bring a topic of interest to global investors into a bright light. The Economist has created a series of fascinating interactive maps which capture debt information by country.

Here is 2010 public debt per capita:

Continue reading

Does Diversification Work?

One of the most common refrains in the financial media and among investors is that the idea and practice of diversification failed in the crash of 2008 and has been proven to be, at best, a theoretical idealization.

In July 2009, the Wall Street Journal published an article called Failure of a Failsafe Strategy Sends Investors Scrambling in which the author laid out the arguments that would suggest that diversification had not worked for investors. Shortly after, I wrote an article in Financial Planning magazine that attempted to counter this thinking. Continue reading

Optimists Play Big Trends

September was supposed to be rocky, but overall the month’s shaping up fairly well.

Christian Wagner of Longview Capital, and Timothy Speiss, of Eisner Amper LLP, were sounding particularly upbeat in a recent Fox Business interview,  outlining a pretty rosy big picture view and the long-term trends they’re betting on. (See clip below) For Speiss, Energy and Technology are appealing. Continue reading

Long Term Evolution in S&P500 Dividends

I came across a nice site for looking at the long-term dividend yield for the S&P500. Going back to the late 1800’s, we are currently near historic lows for the dividend yield for the S&P500. Sometimes a picture really is worth one thousand words, and that is the case here.

There are two major reasons why yields could be very low. Continue reading

Smart Investors Aren’t So Smart

Commentary by Paul Keck.

You might assume from reading the title that I’m saying investors aren’t as smart as they think. Not exactly. What I am saying is the smartest individual investors know they aren’t that smart.

They know they aren’t smart enough to:

  • consistently beat the market after costs
  • time things
  • pick the best funds consistently
  • Continue reading

“Wall Street” The Sequel: What’s Changed?

Wall Street 2 hits theaters tomorrow.  For one sign of how much time’s passed since the original take a look at Gordon Gekko’s old cell phone in the movie trailer below. But of course far more has changed — from the 401 (k) explosion to high speed trading and the derivative economy. Other than it’s location there’s not much of the old Wall Street left.

Portfolioist asked a panel of experts, a bit tongue-in-cheek, to weigh in on how things have changed in the 23 years since Michael Douglas first uttered a variant of  “Greed is Good”.  And what Wall Street 2 would have been about if they’d been behind the cameras. Below hear from corporate governance and movie expert Nell Minow,  New York Times blogger and financial advisor Carl Richards, and socially-responsible investor Paul Herman on the movie’s impact and lessons. Continue reading

Struggling to Rebalance

Individual investors don’t like to rebalance. According to Congressional testimony given by Dallas Salisbury, CEO of the Employee Benefits Research Institute and one of the nation’s leading experts on retirement and savings, more than 3/4 of all 401 (k) holders never make a change to their asset allocation or rebalance. Not once.

Work goes into setting your asset allocation and designing a portfolio that fits your risk tolerance. If that erodes as winners grow and the slow-pokes shrink, it’s certain that your final portfolio won’t look much like your design over time. Continue reading

Carl Richards on Investing, Emotion and Simplicity

Carl Richards, founder of Prasada Capital and a weekly contributor to the New York Times’ Bucks blog, recently took some time out of a busy schedule to talk to Portfolioist. The topic: how investors can get a handle on their own investments. Continue reading