Insights

Stock Bond Correlation Changes Aren’t Concerning

Every investor suffered losses last year because the two most basic investment building blocks, stocks and bonds, both lost value. Many of the investment community’s intelligentsia are in a twist because the correlation between stocks and bonds is now positive for the first time in two decades. They say, full of sound and fury, that bonds offer less diversification now that the correlation is positive. My goal today, without getting… Read More

So You Say You Want Alpha: Cathy Woods has Some

Cathy Woods is a fascinating character. Her ARKK funds were the darlings of the pandemic, focused on innovation, and were on fire. Not surprisingly, investors poured money into the funds, just in time for them to collapse. The fact that investors piled in and out isn’t Woods fault. She bought a portfolio of stocks that she believed in and stuck to her style through the boom and the bust. Last… Read More

Decoding How the Mighty Greenback Shapes Your Investments

Last week, I was asked to consider writing an article about how the dollar’s strength or weakness impacts a portfolio. I’ve covered it a bit over the years, but I thought now would be a good time for an update, and I’m always interested in writing about what readers want to read about, so I try to address specific issues whenever possible. I will illustrate later how the dollar has… Read More

Stock Buybacks: Finding Common Ground Amid Controversy

Companies’ capital decisions aren’t usually very controversial, like paying down debt, paying another quarterly dividend, or upgrading the facilities. Stock buybacks, however, are another story: they generate a lot of controversy. Before getting into the debate, let me take a minute to describe a buyback. When companies have extra capital, they sometimes go into the open market and buy back their own stock, hence the name (although they are sometimes… Read More

How to Avoid Disaster

September will mark the 25th anniversary of the failure of the massive hedge fund, Long-Term Capital Management (LTCM), and my podcast feed is filling up with retrospectives. One podcast featured Roger Lowenstein, the author of When Genius Failed, which is considered the definitive work on the subject. I read it when it came out in 2000 and once again in subsequent years, and it’s a great book that I thoroughly enjoyed…. Read More

ChatGPT Did Not Write This Insight

I resisted downloading ChatGPT until last week because I’m increasingly skeptical about the benefits of technology. Don’t get me wrong; I love technology. I use my iPhone more than I care to admit and have to be mindful about not using it too much (and I still do). The problem isn’t technology – it’s people. It’s like food – we need it to live, and the right foods in the right amounts… Read More

The March Towards Exchange-Traded Funds

Acropolis was an early adopter of exchange-traded funds (ETFs). As the name implies, an ETF is a fund that trades on an exchange. It’s like a mutual fund in that it is generally diversified, but like a stock, it trades throughout the day. When we got going in 2002, ETFs were about ten years old. The first version was State Streets Spyder, which still trades today with the ticker SPY…. Read More

Successful Trading at Acropolis

For nine years now, Acropolis has hired a third party to evaluate the market impact of our trading. Whenever we talk to clients about rebalancing, tax-loss harvesting, raising cash for withdrawals, or putting new money to work, our traders work with the portfolio management teams to figure out what trades ought to occur and then the traders take those trades to market. Last year, our traders went to market almost… Read More

New Rules Could Mean New Strategies

I’d like to meet the person in Washington who comes up with the silly names for laws just for the purpose of creating a catchy acronym. Case in point is the newest iteration of the Setting Every Community Up for Retirement Enhancement, better known as the Secure 2.0 Act. The Act has a number of provisions that raise financial planning issues for a lot of people. For example, were you… Read More

You might not be surprised to learn that I love investment-related podcasts. I listen to about a dozen of them fairly regularly and am often impressed by the guests they get. A recent episode of the Meb Faber Show featured an hour-long interview with Professor Gene Fama. Fama is probably the most influential academic in modern finance after creating the Efficient Market Hypothesis in the early 1970s and co-creating the… Read More