7 Oct 2024

The End (of the Election Season) is Nigh

People started asking me about a year ago what the election would do to stock prices. I didn’t know then, and I still don’t. Over the years, I’ve read many articles describing how markets fare under Democratic and Republican administrations. I’ve also done the research myself and written several of those articles. Last year, I even wrote about what happened in the year leading up to the presidential election because… Read More

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30 Sep 2024

Optimization Overload: When Perfecting Becomes Problematic

When we launched Acropolis over 22 years ago, I thought understanding optimizations would be the key to our success. If we could just figure out “the” optimal allocation, we would be well ahead of everyone else. Of course, that’s true, but figuring out “the” optimal allocation wasn’t possible because you can’t tell in advance. My memory (which could be better) is that the software package we used then suggested a… Read More

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23 Sep 2024

Thank You Chair Powell, May I Have Another!

Early last week, few questioned whether the Federal Reserve would cut interest rates; the only question was whether they would cut by a quarter or a half of a percent. We know now that the Fed cut half a percent (or 50 basis points), but two questions remain. First, why did they cut as much as they did? Second, how much more will they cut? Perhaps I should start with… Read More

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9 Sep 2024

Index Fund Overhaul: Passive Investing vs. Market Concentration

One of my (many) pet peeves is when people offhandedly say, “Just buy an index fund.” I get the point, and I agree with it: Index funds are a great way to invest, much better than the old-school method of active investing. That said, there are thousands of index funds, and the rules that govern the indexes often create very different portfolios with very different performance. The largest tech-sector ETF… Read More

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29 Jul 2024

Small Cap’s Revenge (…has a long way to go)

Take a look at small cap returns last week! Since July 9th, small-cap stocks have risen by about 10 percent, a remarkable run of 16 trading days. Better still, the S&P 500 fell during that time, highlighting the diversification aspect of small caps. One of the pillars of factor investing is that small-cap stocks should outperform large-cap stocks, a phenomenon known as the size premium. From an academic standpoint, there… Read More

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22 Jul 2024

China vs. India

I saw a chart last week that caught my attention, and I recreated it below. It shows the market capitalization weight of Chinese and Indian stocks. Finding historical weights is a little challenging, so my chart shows the year-end weight of the two countries, except in 2024, where I show the market weight as of June 30th, 2024. The picture makes it appear that the last half-year is a complete… Read More

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15 Jul 2024

Tech vs. the World

Last week, Minjung Son sent the Investment Committee some information showing that the total market value of all emerging market stocks was about $10 trillion. Ryan Craft chuckled and said that was about equal to the three largest stocks in the US. Although I’ve written about how concentrated the US market is and how emerging markets haven’t done all that well in recent years, I was amazed that three stocks… Read More

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8 Jul 2024

When will we feel the benefit of higher interest rates?

One of my favorite long-time readers and clients asked me a good question last week, which was: As I recall, David, you said that eventually, higher interest rates would be a benefit. If my recollection is correct, when will that be? It’s such a great question, and I thought I would answer it for everyone, but unfortunately, my answer is a little mealy-mouthed: it depends. It depends on how high… Read More

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1 Jul 2024

Want NVDA? You’ve already got it

I was having breakfast the other day, and someone said they missed not having the 3,000 percent gain on Nvidia (NVDA) over the past five years. Of course, I agreed, but then I returned to the office thinking that the return couldn’t have been that high. In fact, over the five years ending on June 28th, the cumulative return for NVDA was 2,926 percent, so I’ll give that to them…. Read More

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17 Jun 2024

Is the S&P 500 a Growth Index?

In addition to working with private clients, Acropolis has an incredible team of professionals who manage retirement plans, principally 401k plans (click here for more information). I meet with some of the retirement plan trustees to discuss the plan’s investments. When we manage a plan, we want enough choices so participants can build a diversified portfolio but not so many choices that they are overwhelmed by the options and don’t… Read More

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