25 Jun 2015

The Sun is Shining on Small Cap Stocks

A number of people have noted that small cap stocks are really strong this year, as you can see from the chart below. I want to illustrate this outperformance a little differently in the chart below, which requires a little explaining. In the first chart above, I showed what a dollar invested in each index would have turned into.  Although you can’t invest a dollar in anything, let alone an index… Read More

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24 Jun 2015

Maximizing Social Security

It’s a little hard to believe, but I read more and more in the popular press about maximizing Social Security benefits.  One of the best-selling books this year is called ‘Get What’s Yours: The Secrets to Maxing Out Your Social Security’ by Laurence Kotlikoff.    I tried to read it earlier this year and admit that even I found it was pretty dry, and I think it’s fairly obvious that… Read More

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23 Jun 2015

Save Alexander Hamilton

My favorite television show of all time was The Wire, a gritty HBO series about the hard life of the people and institutions in Baltimore, from cops and drug dealers to longshoremen, politicians, lawyers and middle school kids. When the US Treasury announced last week that they intend to replace Alexander Hamilton on the $10 bill in 2020 with an important woman in American History, my first thought was about… Read More

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17 Jun 2015

A Strategy for Stock Sectors

A little more than a year ago, I attempted to answer the question, ‘which stock sector is best?‘ The answer, of course, is that it depends.  It depends on what time horizon you are evaluating, whether you care about overall performance, risk-adjusted performance and so forth. My conclusion to that article is that no sector is ‘best’ and the best strategy is to have diversified exposure to a basket of… Read More

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16 Jun 2015

A Wall Street Creation Working FOR Investors

The investment management industry has been dominated by just a small handful of trends over the last decade: the growth of passive versus active funds, the birth of alternative strategies in mutual funds, the explosive proliferation of exchange traded funds (ETFs) and the overwhelming acceptance of target-date funds. Of those topics, the only one that I haven’t already covered (as denoted by the blue hyperlink) is the overwhelming acceptance of target-date fund (TDFs)…. Read More

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15 Jun 2015

The IMF in the Spotlight

The ongoing debt crisis in Greece has put the International Monetary Fund (IMF) in the spotlight.  For a lot of people, the question is, what is the IMF? I struggle with the answer as well.  My neighbor across the street worked for either the IMF or the World Bank, but I always get mixed up because all of these supranational organizations sound the same to me. As a Columbian national,… Read More

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12 Jun 2015

What Drives Long Run Economic Growth?

It’s Friday in the summertime, so I thought I would do something a little light and easy today. I was reading an article by a St. Louis Federal Reserve economist titled ‘What Drives Long-Run Economic Growth?‘ I’ve been writing about short-term economic issues like the impact of the cold weather on the first quarter and when the Fed might raise interest rates (June, September or January?), so the long-run idea was appealing. The author,… Read More

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11 Jun 2015

How to Tell Emerging from Developed Markets

Last week, I wrote that the emerging market stock indexes that Vanguard tracks will be adding mainland China A-shares to their index (click here and for a refresher).  On Tuesday, MSCI, the world’s most popular index creator for non-US stock indexes announced they would not be adding Chinese A-shares to their emerging markets indexes. MSCI believes there are too many regulatory issues related to non-Chinese owners that could make owning… Read More

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10 Jun 2015

The Law of Unintended Consequences

Last week, I wrote that the recent changes in bond yields were nothing more than volatility.  That’s true, but the increase in volatility has been unusually high in Europe. To help visualize the volatility, I charted the rolling five day volatility of the 10-year note in the US and the Eurozone (which is 100 percent correlated to the German 10-year bond). The blue, and most dramatic line, reflects the yield… Read More

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