Yesterday, I wrote that the yield on the 30-year US Treasury closed at an all time low at 2.25 percent. I also wrote that the yield on the 10-year was 2.66 percent, which was completely wrong: it closed at 1.66 percent on Friday, I simply made a fat fingered mistake – sorry. This mistake notwithstanding, I was struck by the two yields because the all-time record-low yield on the 10-year… Read More
We are pleased to provide a digital copy of Portfolio Insights, our quarterly newsletter. This issue is particularly exciting because it features an entirely new look and feel for the same great content that we’ve been creating for the last dozen years. Table of Contents: Evaluating Global Stock Exposure Predicting Interest Rates Review of 2014 The Allure of Market Timing New at Acropolis Six Financial Planning Myths The US Dollar… Read More
Just before the 2008 financial crisis, a Wall Street insider tipped off the Securities and Exchange Commission (SEC) to insider trading at a large, successful, but largely little known hedge fund, the Galleon Group. The founder, Raj Rajaratnam, had a vast network of contacts that he would pay in exchange for confidential information about a company that would affect its stock price when the information became public. Ultimately, he was… Read More
One of the complaints that I hear about index funds is that their returns are average and buying them guarantees mediocre returns. Not so! If that were true, you would expect that the returns for the Vanguard S&P 500 index fund (VFINX) would be around the 50th percentile when measured against its peer group. The actual percentile might shift around some from year-to-year, in the 40th percentile one year and… Read More
Sometimes I inadvertently slip into financial jargon that is meant to convey a very specific message but ends up being gobbledygook that is off-putting for a lot of people. Recently, I used the term ‘portfolio construction’ in a meeting and the client, understandably said, ‘Dave, I know you mean how it’s built, but what exactly are you talking about?’ It’s true, the term portfolio construction sounds obvious but isn’t necessarily…. Read More
I was emailing a friend who works in the industry on Friday about asset classes that are giving us trouble this year. We both have diversified portfolios for our clients and when you’re truly diversified, something is always giving you a headache. For us, for example, micro cap stocks as measured by the Russell Microcap index are a real aggravation this year, down -1.85 percent this year through Friday compared… Read More
Years ago, before the crisis, I read a terrific book by investor Joel Greenblatt titled, ‘You Can Be a Stock Market Genius: Uncover the Secret Hiding Places of Stock Market Profits.’ Usually a title like that is a turn off for me because it implies that investing is easy and that someone’s behind the curtain who knows the secrets to making money that no one else knows. Despite the title,… Read More
In any investment, the total return is comprised of the income earned and capital appreciation. The yield on the bond market is relatively low, so it’s been good news for bond investors that interest rates have fallen because that means that prices are higher, providing some capital appreciation in a low yield environment. But that’s also the bad news: we’re in a low yield environment. Last year, when interest rates… Read More
Alibaba Group Holding (ticker: BABA) went public on Friday at a price of $68 per share, which valued the company at $168 billion, making it one of the 40 largest companies in the world, according to S&P Capital IQ. Once the stock started trading in the open market, however, investors bid the stock higher and it ended the day at almost $94 per share, valuing the company at $231.4 billion…. Read More
Every now and then, I come across some research that really drives a point home. Yesterday, I found a terrific study by JP Morgan on what they called catastrophic losses – or what kids today might call ‘epic fails,’ which Urban Dictionary defines as: a complete and total failure when success should have been reasonably easy to attain. In the JP Morgan study, a catastrophic loss is defined as a… Read More
