Resources

The World Isn’t Flat — Invest Accordingly

Ever since the financial crisis, when the correlation of all risky assets rose toward 1, investors have been hearing that the world has become flat and the benefits of international diversification are gone. The explanation generally is that the world market has become more integrated and financial markets more globalized. The Power Of Mononationals Cormac…

Active Management Falls Short With Bonds, Too

In a July 2017 Q&A with WealthManagement.com, Western Asset Management CIO Ken Leech asserts that passive investing is unlikely to play as large a role in fixed income as it does now in equities, because active managers outperform their benchmarks much more in the bond market than they do in the stock market. While the trend…

Grading the Forecasters

Larry Swedroe on data that reveals the disappointing accuracy of market forecasts. Larry Swedroe, Director of Research, The BAM Alliance The financial media tends to focus much of its attention on stock market forecasts by so-called gurus. They do so because they know that it gets the investing public’s attention. Investors must believe such forecasts…

The Antidote To Stock Market Hysteria

Market forecasters capitalize on our desire to know the unknowable. Tim Maurer, Director of Personal Finance, The BAM Alliance Just for fun, Google the words “market pullback.” There are over 2.2 million results–most of them market predictions–and the first page of results is dominated by calls for an imminent market reversal that the simple desk…

Hedge Funds Again Miss the Mark

Our colleague at the BAM Alliance, Larry Swedroe unpacks the latest data on hedge funds’ lagging performance. Larry Swedroe, Director of Research, The BAM Alliance Hedge funds entered 2017 coming off their eighth-straight year of trailing U.S. stocks (as measured by the S&P 500 Index) by significant margins. And for the 10-year period ending 2016,…

The Perils of Owning Individual Stocks

Hope vs. wisdom and investors’ failure to diversify. Larry Swedroe, Director of Research, The BAM Alliance Individual stock ownership offers both the hope of great returns (finding the next Google, for instance) and the potential for disastrous results (ending up with the next Lehman). Because investors are not compensated for taking the risk that their…

Persistent Returns for Active Managers Remain Elusive

Latest S&P biannual “SPIVA” report reconfirms: outperforming active funds rarely manage to repeat their success. Larry Swedroe, Director of Research, The BAM Alliance Since 2002, S&P Dow Jones Indices has published its biannual S&P Indices Versus Active (SPIVA) scorecards, which compare the performance of actively managed equity funds to their appropriate index benchmarks. Its midyear…

Annuities … The Good, the Bad and the Ugly

Not all annuities are created equal. Joe Delaney on avoiding the ones that don’t fit your needs. Joe Delaney, Lifeguard Wealth, San Rafael, CA Too often, I’ve heard this all-too-familiar story. A client brings in an annuity policy to review, either for themselves or a family member. They bought it to create a steady annual…

SPIVA Survey Continues Passive Winning Streak

Active management continues to underperform, says S&P’s SPIVA Scorecard. Larry Swedroe, Director of Research, The BAM Alliance Since 2002, S&P Dow Jones Indices has published its S&P Indices Versus Active (SPIVA) Scorecards, which compare the performance of actively managed equity funds to their appropriate index benchmarks. For the first time, the year-end 2016 U.S. Scorecard includes 15…

An Integrated Investment Plan Is Key

A sound investment plan isn’t the only way to find financial security. Earlier this week, we looked at the importance of incorporating different types of risk—specifically, human capital risk—into an overall financial plan. Today I will focus on mortality and longevity risk, and using “tax alpha” strategies to improve the odds of achieving your financial goals….

Understanding Different Types of Risks

Investment risks are important, but they are not the only risks to consider in developing a financial plan. Larry Swedroe, Director of Research, The BAM ALLIANCE Harry Markowitz received the Nobel Prize in Economic Sciences in 1990 for his contributions to the body of work known as “modern portfolio theory.” Probably his greatest contribution was…

A More Complex View On Value

“Value” – defined variously as low book to market, low price to earnings, and low price to sales – has been among the most persistent and reliable predictors of premium returns. Larry Swedroe discusses new research refining the meaning of “value” as it relates to market returns. Eugene Fama and Kenneth French’s 1992 paper, “The…

Private Equity Adds Risk, Little Return

Larry Swedroe on how the risk of private equity doesn’t always equal higher returns. The term “private equity” is used to describe various types (e.g., buyout funds and venture capital funds) of privately placed (nonpublicly traded) investments. Even though buyout (BO) funds and venture capital (VC) funds have similar organizational and compensation structures, they are…

When Emerging Markets Outperform

Larry Swedroe explores the research on when emerging markets outperform. Earlier this week, we looked at emerging markets and why many investors stick to domestic stocks due to two biases: home country and recency, despite a compelling case for emerging market investing. To more fully understand the case for global diversification, I’ll resume the discussion with an…

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