Investment Articles

Articles On Investment

09/15/11 - The Rebirth of the Snake Oil Salesman

When I was a child, every county fair, and every carnival had a snake oil salesman. These remarkable fellows persuaded otherwise sensible citizens...read more

08/01/11 - Common Misconceptions about Managed Futures

Their sales pitch: “During periods of great future uncertainty”, though “future certainty” seems like any oxymoron so translation,...read more

08/01/11 - The Role of Rebalancing

A disciplined rebalancing practice can add a lot of value to a long term strategic asset allocation program. Buy and hold might properly be...read more

02/04/11 - Constructing an Effective Retirement Portfolio

An effective retirement portfolio must balance several sometimes conflicting needs. It must support the planned withdrawal rate, provide for...read more

11/26/10 - Controlling Interest Rate Risk

There has been tremendous talk in the financial media about the possibility of a bond bubble building in the fixed income markets.  In response...read more

08/06/10 - Did Modern Financial Theory Fail?

None of us have enjoyed the last three years. And of course, after a traumatic event people look for reasons and answers. It’s natural to...read more

05/21/10 - Fixed Income Strategy

Interest rates, bond yields, bond prices and inflation are all interrelated and they all help to shape what’s called the yield curve.  The...read more

04/01/10 - It's not Gold, Jerry

We’ve all heard it before.  If you turn on any financial news station you are inundated with experts or commercials saying, “Gold is the best...read more

11/20/09 - 6 Common Misconceptions About Dividends

During periods of low yields and market volatility, more than a few experts recommend dividend stocks and funds. This may sound like good...read more

11/06/09 - Saving For Retirement When You're Not Working

Many individuals these days find themselves out of the workforce, some by choice such as mothers raising small children, others as a result of...read more

11/06/09 - Worst Market Decade Ever - Not So!

It's already started. The media is full of blather that this is the worst decade for stocks ever. The corollary is that stocks have failed us and...read more

09/18/09 - Rules for Post-Recession Investing

Despite the pundits' pronouncements of green-shoots or signs that the economy is on the mend, many investors remain scarred and understandably...read more

08/18/09 - The Glide Slope

An aid to manage risk in retirement accounts Here’s an easy way to estimate how much risk you should take at each stage of your career....read more

07/28/09 - Risk Tolerance is Relative

It is as predictable as the rising or setting of the sun, investors buy when the market is making new highs and sell when the market is making new...read more

07/10/09 - Portfolio Management Pays Off In a Tough Market

When you think about investing, you have a very long decision tree - the question of passive or active, long or short, stocks or funds, China or...read more

06/12/09 - Strategic and Tactical Asset Allocation: What's the difference?

Two thousand and eight was a remarkable year.  Equity markets, commodity markets and corporate debt markets declined in unison leading many...read more

05/22/09 - The Three Ps - Oh, Please!!!: How Not to Construct an Institutional Portfolio

Way back in the 20 th Century people actually believed that superior managers could consistently add value over and above a simple market index...read more

04/17/09 - Accounting Rule: Mark to Market, Mark to Reality, or Mark to Fantasy

I have never heard people discuss accountants as much as I have over the last eighteen months of the economic downturn.  It became even more...read more

04/17/09 - Wither Flation?

Numerous reports estimate that the total cost for the announced US Government programs to cure the financial crisis and jump start the economy...read more

04/17/09 - Where Are They This Time?

Whether you've been with us for a long time or a short time, you know that our ideology is steeped in the belief, and research confirms this, that...read more

11/07/08 - Treasury Bonds Safe is a Relative Concept

2008 may well be remembered as the year of the Treasury. When Treasury Secretary Henry M. Paulson Jr. stole the show from the Fed's Ben Bernanke....read more

09/19/08 - A Little Perspective on China

So much attention today is paid to China and its amazing story.  With over 1.3 billion people, China is estimated to represent approximately 20%...read more

09/19/08 - The Silver Lining in a Market Downturn

Market downturns are no fun but for the long term investor with taxable accounts and a solid investment management plan, they present the...read more

05/23/08 - Thinking About Cash

If you are wondering what to do with your cash, you aren't alone.  Just like 2002 when cash investment yields plunged below 2%, people are again...read more

05/23/08 - Keep Your Fixed Income Boring

Towards the end of 2007, many investors, fearful of equity market volatility, sought refuge in short and so-called ultrashort bond funds. The word...read more

05/07/08 - Maximize Portfolio Wealth by Minimizing Risk

Picking the next hot stock or hot mutual fund has practically no bearing on building up a substantial investment portfolio.  Most retail...read more

04/17/08 - What are you doing "differently"?

We have had a lot of inquiries recently, often from the media, about what changes we are making for our clients in today's markets.    The...read more

01/07/08 - The Emperor Has No Clothes!

The great Wall Street houses promote the fiction that somewhere in their back room is a guru who knows when the market will go up and down, and...read more

09/19/07 - Asset Allocation: How You Slice Your Pie

Have you ever found yourself receiving mountains of statements from custodians for your various investment accounts? You know, you have that...read more

09/07/07 - Never Underestimate the Benefits of Long Term Discipline

Does the financial news have you gripping for the "Tums" lately?  It's almost impossible to dodge the recent chatter, as current stock market...read more

08/17/07 - Value Investing versus Growth Investing - Who are the winners?

I have analyzed thousands of portfolios over my twelve years in the investment business, most of them individuals or families. The most common...read more

06/20/07 - Beyond the Expense Ratio - Is expense ratio the best measure of cost and value?

Capitalism is a great thing for investors. In return for supplying their hard earned funds to the world's markets, and accepting the risks that go...read more

05/23/07 - Re-Introducing the Efficient Frontier

We can all attest to the fact that the Efficient Frontier is one of the most overlooked illustrations in modern finance. I do not know whether to...read more

03/12/07 - Value Or Growth Investing - Whose Style is Better?

Value investing has blown the doors off of growth investing over the last seven years. Value stocks have bested growth stocks every year since...read more

03/12/07 - Technical Analysis: Fruitful or Pointless

Let me start by saying that the purpose of this article is not to support or refute the predictive value of technical analysis. Some have...read more

02/23/07 - Style is Good, Style Drift, Not So Much

Investors who use actively managed funds as their investment vehicle of choice should take heed as style drift can be a detriment to their...read more

12/19/06 - How a Weakening Dollar Helps Your Foreign Investments

Have you spent your greenbacks in Europe lately?  If you are an American and have recently traveled to Europe, you can attest to the fact that...read more

11/21/06 - Fundamental Indexing TM: The New Paradigm or Active Management in Disguise?

Index fund investing can bare a strong resemblance to a long term marriage.  You know you are in the right place, with the right person and you...read more

11/03/06 - Is the Morningstar Rating System All It's Cracked Up to Be?

The Morningstar rating system has gained a great deal of popularity since it was first established in 1985 by the Chicago-based company...read more

09/11/06 - Modern Portfolio Theory: The Watershed Event In Modern Finance

It's a rare thing for a graduate student's thesis to change the world. But Harry Markowitz's 1952 dissertation did just that. Later republished as...read more

09/07/06 - How to Compare Risk Adjusted Returns in Your Portfolio

Maximizing the risk efficiency of your portfolio can have a dramatic long term impact on your returns, and more importantly your wealth.  By...read more

08/14/06 - Investing and Wars

With three wars waging in the Middle East and the menacing nuclear weapon ambitions of Iran, Syria and North Korea, most wonder whether this is a...read more

07/24/06 - A Simple Yet Powerful Risk Control Strategy

With all of the volatility in the market, does your portfolio keeping you up at night? Maybe its time to look at a simple, yet effective strategy...read more

07/06/06 - The View From The Cockpit

Airline pilots and investment advisors both have to re-assure their customers when things go bump in the night. Back in another life I flew...read more

06/16/06 - Risk and Return in Bonds

In the universe of the average investor, bonds provide two important functions. They reduce the risk of the portfolio, and provide a store of...read more

06/02/06 - Why Don't Investors Tilt More?

Your friends and most institutions all have equity portfolios that might be described as domestic total market. If we plot out the characteristics...read more

05/16/06 - Should Interest Rate Forecasting Be a Part of Your Bond Strategy?

Betting on interest rate changes in your bond portfolio is a waste of time. And yet, investors are fascinated with the idea that forecasting will...read more

04/28/06 - My Eureka! Moment

Long ago and far away, before Windows, before the Internet, and before Morningstar on disk, an almost young man was trying to decide what to do...read more

02/17/06 - Small Cap Stocks: Will they continue to outperform?

If individuals could forecast which asset class performed best in any given year than there would be untold riches to be had.  The problem is...read more

02/17/06 - I Don't Have A Thousand Years

Investment advisors talk about the long run because markets are variable. We don’t have nearly enough long term data, and at best, short term...read more

01/17/06 - Asset Location Is As Important As Asset Allocation

Choosing the location of where your investments are located can add significantly to your after tax returns.  Most people understand that modern...read more

12/08/05 - Hedge Funds as Pension Investments

Is There Really an Alternative Universe? Is there a parallel universe where things fall upwards, time goes backwards, and none of the other...read more

07/08/05 - Beyond Indexing Part I

Passive investing is a major improvement over actively managed techniques. Index funds have long been the standard for passive investing. More...read more

06/08/05 - Not All Indexes Are Created Equal

When benchmarking a portfolio or asset class investing investors have multiple indexes they can use.  But which index is most applicable?  You...read more

04/18/05 - Understanding Beta and Market Risk

string(124) "Smarty error: [in evaluated template line 1]: syntax error: unrecognized tag 'literal' (Smarty_Compiler.class.php, line 590)" The only "sure thing" in investing, is that market risk can never be eliminated no matter how much you diversify. Risk is a four letter...read more

04/18/05 - Small Stocks Large Effect

The old saying no guts no glory is well represented in the world of microcap stock investing.  Microcap equities are the wild west of equity...read more

03/28/05 - Portfolio Turnover Can Lead to Lower Investment Returns

When dealing with investment vehicles the old adage less is more certainly rings true.  High portfolio turnover in equity mutual funds can lead...read more

03/28/05 - How Interest Rate Changes Affect Bond Prices

How safe is your bond portfolio in an increasing interest rate environment? Surging prices in the housing and commodity (specifically oil) sectors...read more

01/27/05 - Risk and Reward Part II: Another Look

Two portfolios with identical average returns but different risk levels will have different accumulations. In other words, not all 10% returns are...read more

01/27/05 - David and Goliath: Will Small Cap Stocks Make It Seven In a Row?

Institutional Investors and many Wall Street analysts didn't think it would happen again in 2004 but it did.  Small Cap stocks outperformed large...read more

12/13/04 - Is The Stock Market Doomed When Baby Boomers Retire?

Will your equities suffer when the baby boom generation decides to retire?  There were 77 million baby boomers born between 1947 and 1964, that's...read more

12/13/04 - Risk and Reward Part I

Risk and reward may be related in the global sense, but they certainly don't have to be in your portfolio! It's true - risk and reward are...read more

11/24/04 - Revisiting The Efficient Market Hypothesis

The Efficient Market Hypothesis has been one of the most fiercely debated topics in the world of modern finance, since it was first introduced...read more

11/24/04 - Value vs. Growth Investing

Most portfolios I have analyzed that were constructed by individual investors typically have one element in common; the largest asset class is...read more

11/15/04 - How Much International?

Many investors avoid international exposure in the mistaken belief that they are avoiding unnecessary risk. In fact, by failing to diversify cross...read more

10/15/04 - Maximizing Portfolio Wealth By Minimizing Risk

Most amateur investors and even some professional financial advisors focus on the wrong factors when trying to maximize total portfolio wealth. ...read more

10/12/04 - An Easy Two Percent

If you could be highly confident that you could improve your investment returns by almost 2% per year while taking less risk, would you do it?...read more

06/30/04 - Is Your Portfolio "Off-Balance?"

The investment markets have gone through another wild year--fortunately, this time, the volatility was generally in a positive direction. But the...read more

06/10/04 - Heads Up for Hedge Funds

The hedge fund industry has experienced a considerable growth in the last decade with an estimated 300 funds in 1990 to more than 3000 today! ...read more

06/10/04 - Engineering for Better Returns

If you had the ability to surpass market returns over extended periods of time, wouldn't you do it? Put away the darts, ignore the egocentric...read more

06/05/04 - Evidence Based Investing

Not so very long ago, if you developed a fever some of the world's most prominent physicians would open up one of your veins and bleed you for a...read more

06/05/04 - Controlling Interest Rate Risk

In the late 1990's a popular conversation you would hear at cocktail parties centered around the stock market.  I am sure you know what I am...read more

06/05/04 - Stocks As An Inflation Hedge

The talking heads have gone into overdrive: Inflation is the next big peril! These are the same bright guys that warned us of deflation last year,...read more

02/24/04 - Trouble In Dollar Land

The US Government's massive fiscal stimulus may have perked up our domestic economy a little, but currency traders around the world watched...read more

01/18/04 - Understanding Your Results

When my wife asks me "How do I look?", believe me, the right answer isn't: "Relative to what?". It's unlikely that she would appreciate a...read more

01/12/04 - Kissed by Randomness

It's a matter of faith with me that owners of diversified accounts cannot expect to ever have the top performing portfolio on their block. Last...read more

01/12/04 - Fund Manager Of The Year?

Morningstar just announced their list of fund managers of the year, their annual tribute to the inefficient market. Morningstar is dedicated to...read more

12/13/03 - Increasing Returns Through Asset Allocation

You can improve your after-tax rate of return significantly by allocating your investment capital efficiently.  The passing of the new tax law...read more

04/28/03 - Where Are They Now? Update

Just in case there is some misguided soul somewhere on this planet that still thinks that managers add value consistently, or that past...read more

12/20/02 - Strategy vs. Outcome

Investing is a noisy process. In the short term, it is extremely difficult to distinguish between cause and effect. In the longer term, even with...read more

06/25/02 - The Dollar Slide

With all the juicy scandals this month, the steep fall of the dollar has hardly percolated off the financial pages into the public's attention....read more

05/30/02 - Choosing the Right Investment Benchmark

Whether the stock market is going down, or up, most investors compare the performance of their portfolio and the individual components of their...read more

04/23/02 - The Risk Premium Debate

Is It Time To Reassess Our Expected Return Assumptions? Estimation of future returns is a critical issue for both advisors and investors....read more

04/16/02 - Is Global Asset Allocation Still Appropriate?

Last year brought globally diversified investors solid but uninspiring results. For the third year in a row, global asset allocation...read more

04/16/02 - Diving For Dividends

Should stock dividends be in your investment future? With market observers questioning whether stocks will return any time soon to the...read more

04/08/02 - Please Don't Shoot The Messenger

One of the liveliest debates in modern finance revolves around defining the appropriate equity premium. Before you dismiss this as totally an...read more

04/03/02 - Capital Pricing Model

The fickle finger of fate If Bill Sharpe's first thesis had been accepted, the world of finance might look a lot different today....read more

02/19/02 - The Nature of Risk and Concentrated Positions

Finance 101 The market never rewards an investor for any risk that could be diversified away. All risk and return assumptions are based on a...read more

12/26/01 - Lump Sums and Dollar Cost Averaging

Congratulations! You won the lottery, inherited some money from a distant relative, sold your company, or rolled your pension into your IRA. You...read more

12/21/01 - Back To Basics

As we sit here surveying the wreckage in the recent markets we should review a few basics. If we can keep some fundamental economic theory in mind...read more

12/14/01 - Will Small And Value Premiums Persist?

Long-term data reveals a meaningful small and value premium. Academics take these premiums for granted. Accordingly, we overweight our portfolio...read more

12/14/01 - Fama-French Three Factor Model Part II

The Fama French Three Factor Model finds that stock investors most care about three variables: market, size and value. Each of these three...read more

12/10/01 - Fama-French Three Factor Model Part I

The Fama-French Three Factor Model provides a highly useful tool for understanding portfolio performance, measuring the impact of active...read more

11/25/01 - Dollar Cost Averaging: Effects of Volatility

A simple exercise turns conventional wisdom on its head. Conventional wisdom held that Dollar Cost Averaging works best with funds or stocks...read more

11/17/01 - How Often Should You Rebalance Your Portfolio

Once you have set up the "perfect" asset allocation plan, you can kick back and relax for a while. But, eventually, you will have to do a little...read more

11/01/01 - Dollar Cost Averaging - The Basics

Dollar-cost averaging has been described as one of the oldest, leastexciting ways of investing. But almost everyone agrees on its validity. It's a...read more

10/28/01 - The Limits of Diversification

Diversified portfolios have held up remarkably well since April 2000, a period many commentators are calling the worst in 30 years. Fortunately,...read more

10/28/01 - Growth vs. Value Investing - Part 2

In our previous article we discussed the underlying theory that propels growth stock investing as a philosophy. Now let's look at the practical...read more

10/22/01 - Is A Recession Inevitable?

When the stock market re-opened on September 17th, the bear came to the party and he ate everybody's lunch! The one-day results were not pretty....read more

10/16/01 - Growth vs. Value Investing - Part 1

Growth investors have had substandard returns when compared to investments in either the entire market, or value investors. Why should that be?...read more

10/01/01 - 100% Index 100% Of The Time

Index funds are the lowest cost, lowest risk, and lowest tax cost solution to reliably capture the performance of the world's markets. Using...read more

09/17/01 - What Now

Horror, disbelief, sadness, anger, rage, frustration, impotence, depression and fear are the emotions cycle through me relentlessly. I desperately...read more

09/13/01 - The Perils Of Owning Your Company's Stock

Here's a little food for thought: The August 23,1999 issue of Pension and Investments states that that 43.8% of the total assets of the 50 largest...read more

09/10/01 - Growth Stock Investing: A Premier Part I

Growth stock investing is ever popular, even if unrewarding. Growth stock investors are willing to pay more than the current value for a company...read more

09/10/01 - Growth Stock Investing: A Premier Part II

In our previous article we discussed the underlying theory that propels growth stock investing as a philosophy. Now let's look at the practical...read more

08/17/01 - Three Mistakes To Avoid

Nostalgic for those days of yesteryear when everything you touched turned to gold? When stocks could only go up, and bond yields were fat?...read more

08/03/01 - Momentum Investing - Greater Fool Theory On Steroids

Although momentum investing can be unusually successful for several months, or even a couple of years, it has proven to be a low return, high risk...read more

08/02/01 - Is The Bear As Bad As He Appears?

Over the course of the past year and a half, many investors, for the first time, have shaken hands with the bear, after riding the bull through...read more

05/15/01 - How to Become a Millionaire

Who wants to be a millionaire? Almost everybody. Who could be a millionaire? Almost everybody. It kinda makes you wonder why there aren't more....read more

04/17/01 - Dare To Be Different

We're Back Diversified portfolios are all the rage. After a short absence they have returned to fashion. Now that the Nasdaq is just about...read more

04/01/01 - Where Are They Now?

I often encounter investors that still believe that the most important criteria for selecting an investment manager is past performance. This can...read more

03/24/01 - Academic Support for the Use of Index Funds

The rationale for using index funds springs from efficient market theory. The literature, extending back over two generations in support of...read more

03/10/01 - Value Lives

If you haven't noticed, value is back. So much attention has been focused on the collapse of the growth and tech sectors that you might be...read more

01/16/01 - Index Fund Investing

Index funds offer compelling advantages to investors in all markets where they are available. Index funds are the lowest cost, lowest risk, and...read more