Resources

Reversion To The Mean Phenomenon: Part IV

Seeking Alpha

This final post of the RTM series will explore the importance of discipline. The academic evidence demonstrates that the determinant of almost all of the risk and return of a portfolio is its asset allocation. It’s important to add that because of recency, the most important determinant of the return that an investor’s portfolio actually produces might…

Reversion To The Mean Phenomenon: Part III

Seeking Alpha

Our last post looked at the issue of what is expected to happen as a country migrates from frontier to developed markets. We should expect to see the cost of capital fall in such a country. Among the reasons is that regulatory regimes, including protections for foreign investors, are typically strengthened. The falling equity risk premium demanded…

Reversion To The Mean Phenomenon: Part II

Seeking Alpha

My prior post explored the ninth wonder of the world: reversion to the mean. Today, we continue the discussion on this phenomenon. Forecasting stock returns is a more difficult task than forecasting bond returns. While the relationship only holds at long horizons, what we do know is that valuation metrics such as P/E ratios have had an…

Reversion to the Mean Phenomenon: Part I

Seeking Alpha

The Seven Wonders of the Ancient World is a list of remarkable constructions of antiquity. They are the Great Pyramid of Giza, the Hanging Gardens of Babylon, the Temple of Artemis at Ephesus, the Statue of Zeus at Olympia, the Mausoleum at Halicarnassus, the Colossus of Rhodes and the Pharos of Alexandria.   Benjamin Franklin…

The Dividend-ETF Trap

ETF

  Over the last few years we’ve seen a dramatic increase in interest in dividend-paying stocks. The heightened interest has been fueled by both the media hype and the current regime of interest rates that are well below historical averages.   The low yields available on safe bonds led even many once-conservative investors to shift…

Faint Praise For 130/30 Funds

ETF

Hedged (long/short) mutual funds are the money management industry’s answer to illiquid hedge fund strategies. The premise of long/short funds is that the managers can apply their security-selection skills to a broader opportunity set, which is to say they can go both long and short, instead of long only. The broader opportunity set should make…

The Secret to Picking Actively Managed Mutual Funds

Huffington Post

If you are a regular reader of my blog, you know I recommend against buying anyactively managed mutual fund. Instead, I advise investing in a globally diversified portfolio of low-management-fee index funds, passively managed funds or exchange-traded funds (ETFs), in an asset allocation suitable for you. Investors are looking at the data and getting the message. According…

A Surprising Spin on a Bad January

Huffington Post

There was much hand-wringing about the poor stock market returns in January. The financial media engaged in its usual frenzy of speculation about whether these results meant we were in for a “correction” or worse. Typical of the financial babble about the “significance” of January returns is this silly observation by Matt King, chief investment officer at…

Lessons From 2013 With Larry Swedroe

In this video, Larry Swedroe reviews lessons from 2013. Lessons from 2013 with Larry Swedroe from The BAM ALLIANCE on Vimeo. Copyright © 2014, The BAM ALLIANCE. This material and any opinions contained are derived from sources believed to be reliable, but its accuracy and the opinions based thereon are not guaranteed. The content of…

Faith-Based Funds Don’t Mean Divine Returns

Seeking Alpha

Socially responsible investing (SRI) has been referred to as “double-bottom-line” investing. The implication is that you are seeking not only profitable investments, but also investments that meet your personal standards. Faith-Based Funds (FBF) can be viewed as a subset of SRI. While SRI applies screens on secular social concerns, FBF screens investments based on the…

The Lies Of Private Equity

ETF

While embarking on scenic tours can make life both interesting and exciting, they’re best avoided when it comes to the world of investing. The reason is that most “interesting” investments fail to deliver on their promise of returns sufficient to compensate for their incremental risks. This has been especially true of hedge funds. And it…

A Close Look At Emerging Markets

ETF

There’s an interesting paper from Martijn Cremers, a professor of finance at the University of Notre Dame, on the performance of emerging market stocks that are the publicly traded affiliates of multinational companies. But like so much in the world of investing, Cremers’ findings, while certainly alluring, need to be examined closely before investors jump into…

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