Our exposure to Russian stocks is very low, and we don’t have any exposure to Ukrainian stocks. To figure out our exposure, I looked at our holdings as of Friday and found that we have 2.6 percent of all of the money outside of the 401k plans that we manage in emerging markets stocks. Although we hold more than a dozen diversified emerging markets-based mutual funds and ETFs, 92.2 percent… Read More
According to data from Dimensional Fund Advisors (DFA), the value of the US stock market at year-end was worth $28.1 trillion – about 55 percent of the market value for all of the world’s stocks, which totals $51.2 trillion. Developed international stocks are worth $17.4 trillion in aggregate (34.0 percent), and emerging markets stocks are worth $5.7 trillion (11.0 percent). In theory, passive investors should allocate their portfolio accordingly. In… Read More
What’s the right allocation to a risky asset class like emerging markets stocks? Since the launch of the MSCI EAFE EM index that tracks emerging markets in 1988, the returns have outpaced the S&P 500 by 0.33 percent per year: 10.56 percent versus 10.23 percent. (All data from Jan 1988 through Jun 2016). As you might expect, the extra return has come with extra risk: the emerging markets index has… Read More
One of my favorite reads of the year is from the Yale Investments Office, which manages their $25.6 billion endowment. You can find the report by clicking here. Yale is routinely the best-performing endowment in the world and has earned a remarkable 13.9 percent return over the last 30 years – well above the 10.7 percent return for US stocks, 8.7 percent return for foreign stocks and 7.1 percent return… Read More
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
For the most part, the returns associated with foreign stocks and bonds have two components: the return of the stock or bond and, secondly, the return of the foreign currency. Over the past eight months, the impact of the exchange rate has been unusually high. For example, a German investor that owns an index fund in the DAX is up 24.04 percent so far this year through yesterday. For… Read More
Legendary investor Peter Lynch once said that if you spend 13 minutes per year on economics, you’ve wasted 10 minutes. Although I spend more than three minutes per year looking at economic data, I do tend to look a lot less than others in the industry. Many years ago, I saw a study that showed that the connection between gross domestic product (GDP) and stock market returns were lowly correlated,… Read More
