21
Aug
2014
Mutual Fund Fees Matter
As I mentioned the other day, I’ve been thinking a lot about what’s changed over the years here at Acropolis. Three years ago, we made our first investment in open-ended mutual funds. We were early adopters of exchange traded funds (ETFs) that operate like mutual funds in some ways but are a little more tax efficient, offer liquidity during the trading day and are often slightly less expensive. Today, we’ve… Read More
20
Aug
2014
Avoiding Risk Can Be Risky
In my opinion, one of the most amazing stories this year is the surprise drop in interest rates. The 10-year US Treasury note started the year at three percent and nearly everyone, including me, expected interest rates to rise this year (but for the short end, which is controlled by the Fed). Today, the 10-year closed at a yield of 2.40 percent and closed as low as 2.34 percent last… Read More
19
Aug
2014
Not All Indexes Are Created Equal
Acropolis will turn 12 in less than 10 days and I can’t help reflect on what has changed over that time and what has stayed the same. Since the beginning, we’ve used index funds, but the way we use them has changed fairly dramatically in some cases. Take small cap stocks, for example. A dozen years ago, we used exchange-traded-funds (ETFs) as the core component of our small cap allocation… Read More
18
Aug
2014
Classic Conflict of Interest
Although it’s been gone for a long time now, I always admired, the St. Louis based brokerage, A.G. Edwards and its CEO while I was growing up, Ben Edwards. I met him one time at a wedding while I was in college and we spoke for five or ten minutes. As you might expect, he gave a quick spiel about how great the company was and how important it was… Read More
15
Aug
2014
Riots and Homeowners Insurance
For the better part of this past week, I was out of the office at family camp in Minocqua Wisconsin. I really tried to avoid my phone and the emails and news that goes with it. As a result, I had no idea that while I was enjoying the world-famous Min-aqua-bat trick water ski team (photos here), the St. Louis suburb of Ferguson was burning after the shooting of Michael… Read More
5
Aug
2014
What Argentina’s Debt Default Means to You
The story of Argentina’s recent debt default begins in the Great Depression. Not our Great Depression – their Great Depression, which started in 1998 and ended in 2002. Leading up to the crisis, the Argentinian government massively over-borrowed and was forced to default on their bonds when the country fell into financial crisis – the economy shrank by 20 percent, unemployment rose to 25 percent, bank deposits were seized, the… Read More
30
Jul
2014
Official Market Forecast Update
If you were reading Daily Insights back in January (and I hope you were), I started the year off right with the first ever Official Acropolis 2014 S&P 500 Market Forecast. In case you missed it, here’s what I said: ‘We forecast with a 90 percent degree of confidence that the S&P 500 will close the year at 2,033, plus or minus 450 points.’ So far, we’re nailing it! Just… Read More
29
Jul
2014
Pension Cuts Hedge Fund Investments
I was reading the Wall Street Journal over the weekend and saw that the California Public Employees Retirement System (Calpers) was cutting back their hedge fund exposure by 40 percent. Given that hedge funds have generally struggled over the past five years, I was interested to see what the article said, and, basically, it said that they weren’t happy with the lackluster performance and high fees. The article then said… Read More
28
Jul
2014
Money Market Reform
Cash may seem like the least interesting asset class at this point with interest rates hovering near or at zero for the past several years, but there was a major shift in policy last Thursday. For the most part, investors forget that most cash is actually parked in money market mutual funds. The money market funds invest in short-term government bills from around the world and debt issued by corporations… Read More
24
Jul
2014
Visualizing Bond Returns
Over the years, we’ve seen and created a ‘periodic table’ of returns that stacks asset classes in order of their performance on a year by year basis. By color coding each asset class, most investors look at the table and realized that asset classes jump around a lot and it’s difficult, if not impossible, to make good timing decisions. I thought it would be interesting to the same thing with… Read More