Navigating Bond Market Holidays
12 Nov 2015
Yesterday was Veterans Day. A Federal holiday in the US where we honor those who have served in our country’s military during wartime and peacetime. But it also makes for something a bit strange in the financial markets. If Veterans Day falls on a weekday, the stock market is open while the bond market is closed. Because we are sensitive to transaction costs and realizing capital gains in our client’s… Read More
New Data Helps Planning for College
06 Nov 2015
It seems like it was only yesterday that I was pouring over US News & World Report magazines and the Princeton Review book ‘best colleges.’ Of course, it’s obvious that it was a while ago because I’m referring to magazines and books. Today, everything you need is online. In fact, the volume and quality of the data just got a little better in my opinion thanks to the new College… Read More
Efficient Markets: Fact and Fiction
27 Oct 2015
For almost 50 years, one of the most controversial ideas in finance is that markets are efficient as presented by Gene Fama’s Efficient Market Hypothesis (EMH) in 1966. Let’s start with a simple definition of EMH: Current market prices incorporate all available information and expectations and are the best approximation of intrinsic value. In some ways, it’s such a simple statement that it’s a little surprising that it’s so controversial…. Read More
Jack Bogle Doesn’t ‘Do” International Investing
26 Oct 2015
Jack Bogle, the founder of Vanguard, is one of my heroes. Earlier this year, there was a petition to award him the Presidential Medal of Freedom (that I asked you to sign) and he wasn’t even close to getting enough signatures for the President to consider the petition. I was both surprised and disappointed. I’ve read several of his books and whenever I see him interviewed, I pay attention. A… Read More
I’ve Got an Embarrassing Admission
20 Oct 2015
In September, I wrote an article about the Dow Jones Industrial Average (DJIA) – how it was constructed, how it compares to the S&P 500 and why I think, to quote myself, ‘that it’s an almost worthless relic of history.’ A few readers emailed me to say that while they agreed that the DJIA is a funny index with its price-weighted construction and limited number of stocks, its performance roughly… Read More
Portfolio Insights
15 Oct 2015
We are pleased to provide a digital copy of Portfolio Insights, our quarterly newsletter. Table of Contents: The Correction In Perspective The Importance of Discipline Information Security Today New at Acropolis Janet Blinked Click here to read this issue: 2015 Q3 Portfolio Insights
The Right Time Horizon for Stocks
09 Oct 2015
When people ask me how long their time horizon ought to be when investing in stocks, I usually say 10 years. It occurred to me the other day that either I’ve never really looked into this in a very detailed way or I’ve forgotten about it. In either case, it’s now time to look. To answer this question, I looked at rolling returns for the S&P 500 since 1926 for… Read More
Visualizing Stock Returns
09 Oct 2015
A great way to visualize asset class returns is to put them into what the industry calls a ‘periodic table,’ which I’ve done below. The basic idea is to order the returns of asset classes in each calendar year from best to worst. In the chart below, 2006 is the first year and the best performing asset class in gray was 35.9 percent. At the bottom of the column is… Read More
Today’s Ugly Duckling is Tomorrow’s Swan
07 Oct 2015
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
Active or Passive? Yes, Exactly.
05 Oct 2015
The Wall Street Journal ran an interesting article over the weekend entitled, ‘Three Things to Know About Smart Beta.’ You can find the article here, but you may need a subscription. Before diving into the article, the first thing you should know is that smart beta is the marketing term for tilting your portfolio towards factors like size, value, momentum and quality. We call this factor investing, but there are tons of names in the market… Read More