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 [...]
Archive for the ‘Uncategorized’ Category
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 »
Be Entertained by the Stories; Trust Only the Data
Posted in Active Investing, financial planning, Long-term investing, Market Outlook, Media and the markets, Uncategorized, tagged confirmation bias, data, headlines, investing mistakes, investor bias, Nassim Taleb on April 5, 2012 | 1 Comment »
Guest Post by Contributing Editor, Robert P. Seawright, Chief Investment and Information Officer for Madison Avenue Securities. All of us who work in the financial markets have seen narratives like it thousands of times and said something like it ourselves almost as often. From Alan Abelson in the current Barron’s: “THE STOCK MARKET TOOK A [...]
Housing Prices and the Economy: Is There Any Good News?
Posted in Investors, Long-term investing, mortgages, Real Estate, Uncategorized, Wealth, tagged case shiller, economy, Housing, housing prices, income, recession, Wealth, wealth effect on April 2, 2012 | 1 Comment »
New data shows that housing prices are not improving. Nationally, prices have now dropped 34.4% from their peak in 2006. Prices are now the lowest they have been since the end of 2002, according to the Case/Shiller index. Robert Shiller, co-creator of the index and long-term researcher on housing prices, warns that risks remain and [...]
Should You Invest In an Initial Public Offering?
Posted in 401(k), Active Investing, Asset Allocation, financial planning, Income Investing, Investors, Leverage, Long-term investing, Low Cost Investing, Market Outlook, Risk, Uncategorized, tagged Facebook, Google, LinkedIn on March 27, 2012 | 3 Comments »
Guest Blog by Vanessa Richardson, Mint.com. Facebook recently filed for an initial public offering (IPO) to raise $5 billion in its IPO, putting its total valuation at $100 billion. Many investors, both institutional and individual, are drooling over the prospects of buying into the hottest company on the block – for now. I say for now, [...]
From the Portfolioist Bookshelf: Rethinking the Equity Risk Premium
Posted in Active Investing, Asset Allocation, Bonds, Financial Advisors, Investors, Long-term investing, Retirement, retirement income, Risk, Stock Investing, Uncategorized, Volatility, Wealth, tagged equity risk premium, P/E Ratio on March 23, 2012 | Leave a Comment »
Where do we come up with the idea that stocks “should” provide returns substantially greater than bonds? What are the factors that determine the expected future return of stocks as compared to bonds? The answers to these questions are at the core of studies into the equity risk premium (ERP) and the CFA Institute has [...]
The Big Retirement Shift: From Saving Up to Drawing Down
Posted in 401(k), Active Investing, Asset Allocation, Income Investing, Leverage, Long-term investing, Low Cost Investing, Market Outlook, Market Timing, Mutual Funds, Passive Investing, pensions, Retirement, retirement income, retirement planning, Risk, Stock Investing, Uncategorized, Volatility, tagged 401(k) plan, 401k, Baby Boom Generation, baby boomers, REIT, REITs, ZVI Bodie on March 20, 2012 | 2 Comments »
The financial services industry is in a period of substantial change. Low interest rates, new regulations and additional scrutiny are changing the landscape. Perhaps the biggest change is the transition of the first wave of Baby Boomers from working to retirement. Not only is this generation huge, but its also the first “401(k)” generation. The [...]
Retirement: Demographics and Destiny
Posted in 401(k), financial planning, Leverage, Long-term investing, Market Outlook, Portfolio Investing 101, Retirement, retirement income, retirement planning, Risk, Stock Investing, Uncategorized, Volatility, tagged Arnott, baby boomers, Chavez, retirement, retirement income, Wall Street Journal on March 13, 2012 | 4 Comments »
In a recent interview in The Wall Street Journal titled “Bad New for Boomers,” Rob Arnott presents a fairly grim view of the retirement income that investors can expect to generate from their investment portfolios. His thesis is that aside from all of the economic turmoil that may constrain future earnings growth, there is an [...]
Financial Services for the Masses
Posted in Investors, Low Cost Investing, Market Outlook, Portfolio Investing 101, Regular Investing, Uncategorized, Wealth, tagged broker fees, brokers, financial services, institutional investors, JP Morgan, low interest rates, macys, small investors, walmart, wealth management on March 9, 2012 | 2 Comments »
JP Morgan has gotten considerable attention in the press for a recent statement that serving clients with less than $100,000 in assets is unprofitable. Not surprisingly, one response to this statement has been to frame it in terms of the message that financial institutions just want rich clients and don’t want to spend their time [...]
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 [...]
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