Each year, the research firm DALBAR publishes their Quantitative Analysis of Investor Behavior. Every year, the results show that individual investors are their own worst enemies. And this year is no exception. The QAIB examines the real returns earned by investors in equity mutual funds, bond mutual funds, and asset allocation mutual funds. Over the [...]
Archive for the ‘Diversification’ Category
The Most Common Mistake Investors Make
Posted in Active Investing, Asset Allocation, Behavioral Finance, Bonds, Diversification, ETFs, Financial Advisors, financial planning, Investors, Long-term investing, Low Cost Investing, Market Outlook, Market Timing, Media and the markets, Mutual Funds, Personalization, Retirement, retirement planning, Stock Investing, Uncategorized on May 11, 2012 | 5 Comments »
Stocks and Shocks: What to Do?
Posted in Behavioral Finance, Bonds, book review, Commodities, Corporate Governance, debt, Diversification, financial planning, Global Investing, Leverage, Long-term investing, Market Outlook, Market Timing, pension plans, pensions, Personalization, retirement planning, Risk, Stock Investing, Uncategorized, Volatility, Wealth, tagged China, energy, energy policy, Euro, Europe, european debt, FDIC, France, Iran, Italy, Obama, oil, Persian Gulf, Spain on May 2, 2012 | Leave a Comment »
Guest Post by Contributing Editor, David Kotok, Chairman and Chief Investment Officer, Cumberland Advisors. How do we avoid walking into a “left hook” in the markets? That was the discussion this week during a client review. “Can’t you see them coming and avoid them?” he asked. Well maybe some folks can, but the issue of [...]
Why Mutual Fund Managers May Not Act in Your Best Interest
Posted in Active Investing, Behavioral Finance, Diversification, Financial Advisors, financial planning, Market Timing, Markets, Mutual Funds, Retirement, Stock Investing, Uncategorized, tagged herding mentality, Index Funds, Jeremy Grantham, mutual fund managers on April 27, 2012 | 1 Comment »
Jeremy Grantham has produced yet another truly outstanding essay in GMO’s Quarterly Letter to Investors for April 2012. Never reluctant to take on controversy, he focuses on the ways in which mutual fund managers have strong incentives to behave in ways that are often not in the best interests of investors in their funds. In [...]
Financial Literacy is the Issue of the Month? Try Issue of the Century.
Posted in Active Investing, debt, Diversification, financial planning, Investors, Leverage, Long-term investing, Market Outlook, Market Timing, Markets, mortgages, Mutual Funds, pension plans, pensions, Real Estate, Retirement, retirement income, retirement planning, Risk, Stock Investing, Uncategorized, Volatility, Wealth, tagged budget, credit card debt, financial literacy, housing bubble, student loan debt on April 24, 2012 | 3 Comments »
April is Financial Literacy Month. All month long, I have been trying to think of how to write a post that can express the depth of my conviction that the lack of financial knowledge is at the core of some of the biggest problems that we, as individuals (and as a nation) are facing. There [...]
Sell in May? 9 Trillion Reasons to Say “No”
Posted in 401(k), Active Investing, Asset Allocation, Diversification, financial planning, Global Investing, Investors, Leverage, Long-term investing, Market Outlook, Uncategorized, tagged bonds, Fed, Federal Reserve, G4, interest rates, sell in may, sell in may and go away, stocks on April 20, 2012 | 3 Comments »
Guest Post by Contributing Editor, David Kotok, Chairman and Chief Investment Officer, Cumberland Advisors. The old adage “Sell in May and go away” was good guidance for stock markets last year. The market peaked on April 29 and bottomed out on October 3. For a detailed discussion of this period and the subsequent bull-market recovery, [...]
The Biggest Unknown in Financial Planning
Posted in 401(k), Active Investing, Asset Allocation, book review, Diversification, financial planning, Income Investing, Investors, Leverage, Long-term investing, Low Cost Investing, Market Outlook, pension plans, pensions, Personalization, Rebalancing, Retirement, retirement income, retirement planning, Risk, Stock Investing, Uncategorized, Volatility, Wealth, tagged bonds, government bonds, monte carlo, safe income on April 10, 2012 | 3 Comments »
In a recent blog post, I reviewed a new book on the future of the Equity Risk Premium (ERP). For those who are not familiar with the ERP, it is the additional return that investors expect to receive for bearing the risk of owning company stock vs. owning a low-risk asset like government bonds. As [...]
Dr. Andrew Lo: ‘Buy and Hold’ Does Not Work Anymore
Posted in Diversification, ETFs, Long-term investing, Market Outlook, Market Timing, Markets, Rebalancing, Regular Investing, Risk, Stock Investing, Uncategorized, Volatility, Wealth, tagged Andrew Lo, Burton Malkiel, buy, buy and hold, diversification, hold, Risk, risk appetite, risk budgeting, risk objective, volatility on March 2, 2012 | 2 Comments »
Dr. Andrew Lo is a thought leader in the world of portfolio management. The MIT/Sloan School of Management professor and Director of MIT’s Laboratory for Financial Engineering has been widely quoted on the implications of the 2008 financial crisis. One theme that Dr. Lo emphasizes repeatedly is that the risks associated with different asset classes [...]
Calculating the Cost of a College Education
Posted in 401(k), Active Investing, Diversification, financial planning, Tools, Uncategorized, Wealth, tagged college, college education, saving for college, Tuition on February 15, 2012 | 1 Comment »
I recently came across a calculator developed by Morningstar to help families estimate future college costs and to determine whether they are on track with saving to meet the future costs of higher education. Let’s have a look at what this tool can and cannot do and how such a tool may be useful. The [...]
Dividend Stocks vs. Bonds: Are They Worth the Risk?
Posted in 401(k), Active Investing, Asset Allocation, Diversification, Dividends, financial planning, Income Investing, Investors, retirement income, retirement planning, Uncategorized, Volatility, tagged Bogleheads, bonds, Burton Malkiel, Dividend Stocks, income, Treasury bonds on February 10, 2012 | 3 Comments »
One of the recurring themes in the financial press in recent years is a warning to income-oriented investors not to pile into dividend-paying stocks to boost portfolio income. The Wall Street Journal has a recent article on this topic titled, “Why Dividend Stocks Aren’t the New Bonds.” This article is motivated by the fact that [...]
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