2 Mar 2020

We Planned for This

The selloff was mostly driven by concerns about the spread of the coronavirus outside of China.  Although the World Health Organization (WHO) said that it was not yet a pandemic, it increased its risk assessment from ‘high’ to ‘very high.’ Although the bond market received less media attention, the results were equally dramatic.  For reference, the yield on the 10-year US Treasury on January 31st was 1.51 percent.  On Friday,… Read More

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15 Apr 2019

Why Hire a Financial Advisor?

Over the years, most of the Daily Insights that I’ve written are about investing, financial planning or, less frequently, economics. I don’t think I’ve ever written about the people hire financial advisors – mostly, because I can’t come up with much of an answer other than a generic statement about ‘peace of mind’ or describe why my most recent client hired me. Now, though, I’ll have a better answer, thanks… Read More

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28 Jan 2019

Lessons From the Shutdown

The big news on Friday was an agreement between The White House and Congressional leaders to reopen the government until mid-February to allow border negotiations to continue. Whatever you feel about President Trump, Speaker Pelosi, the shut-down, ‘The Wall,’ or any other hot-button that’s sure to upset someone, there is a salient, non-partisan lesson that’s worth noting: the importance of either maintaining an emergency fund or sufficient liquidity. Although financial… Read More

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7 Oct 2015

Today’s Ugly Duckling is Tomorrow’s Swan

Normally when we talk about the perils of performance chasing, we are referring to investors buying into asset classes that have done well in the recent past and avoiding those that haven’t fared as well. Right now, for example, investors want to own US large cap stocks because the S&P 500 is up 13.74 percent over the five years ending Oct. 5, 2015 and want to avoid emerging market stocks… Read More

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15 Apr 2015

Behavior Beats Strategy

In the past two weeks, I’ve written primers on two of the strategies that we use, over-weighting to small cap stocks and investing in cheap, value stocks. One of the Portfolio Managers here at Acropolis correctly reminded me that all of the best strategy in the world can be undone with poor investor behavior, so I thought I would try and put some numbers on that idea. To demonstrate how… Read More

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21 Jul 2014

Money and Happiness

Any sensible person knows that you have to save money for the future. At the very least, you need to have money set aside for the so-called ‘rainy-day.’  If you don’t have a cushion, the consequence of a negative surprise can be a lot worse than if you have an emergency fund set aside. Do money and happiness go together?  Can saving actually make you happier?  I wouldn’t have thought… Read More

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20 May 2014

Investors Keep Chasing Performance

One of the ways that investors hurt themselves is by chasing performance.  Unfortunately, many financial services organizations enable this practice by focusing on short-term performance. Recently, I saw some data that showed flows into mutual funds and exchange traded funds (ETFs) based on their Morningstar star rating. The chart is self-explanatory except for the columns labeled NR, which means ‘Not Rated.’  To earn a Morningstar star rating, you need at… Read More

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10 Apr 2014

The Wisdom (and Madness) of Crowds

The 2004 book, The Wisdom of Crowds, by James Surowiecki, starts with a vignette about the famous British scientist Francis Galton set in 1906. In the story, Galton travels to the county fair and finds a weight judging competition, where the crowd could wager on how much a fat ox weighed.  For a sixpence, people could write down their wager and the closest person one a prize (but not the… Read More

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