I am no fan of Jim Cramer. While I fully understand his persona is a carefully crafted schtick designed to entertain, his Mad Money program harms Main Street investors. His stock-picking recommendations are no more likely to be accurate than the flip of a coin. The myth that Cramer has some special insight into the…
According to the 2014 Investment Company Fact Book, the mutual fund industry in the United States manages an astounding $15 trillion in assets. That represents a whole lot of investors who must be disappointed with the performance of their actively managed mutual funds. Approximately 85 percent of active large-cap stock funds underperformed their benchmark indexes…
America has discovered a new financial guru. Tony Robbins’ new book on investing, MONEY Master the Game: 7 Simple Steps to Financial Freedom, has shot to the top of Amazon’s bestseller list. Mr. Robbins, who has been nicknamed the “mahatma of motivation,” excels at self-promotion. The publication of his book has generated immense publicity, including…
Many investors are glued the financial news, tracking the latest reports about interest rates, earnings reports and stock movements. They believe this kind of intense focus will help them maximize returns. They couldn’t be more wrong. Instead of spending time looking up a stock symbol to find out its latest price, investors would be better…
The news keeps getting worse for active management. Here’s a summary: Poor year-to-date performance In an article on MarketWatch.com, Mitch Tuchman references data from Bank of America indicating only 17.7 percent of active managers have beaten a large-cap index benchmark year to date. That is a significant decline from last year, when 40.5 percent beat…
There is a huge variation in the quality of advice that investors are exposed to every day. If you can’t differentiate between good and bad information, it can cost you dearly. It may even mean the difference between retiring with dignity and running out of money in your golden years. Terrible advice It’s sad that…
Last week was the worst week for the S&P 500 and the NASDAQ since May 2012. The S&P 500 index dropped 3.1 percent on the week to 1,906.13 and the NASDAQ fell 2.3 percent to 4,276.24. Not surprisingly, the market’s volatility and rapid decline brought out the worst in the financial media. The amount of…
A new multi-part British documentary, How to Win the Loser’s Game, takes a hard look at active management. Although done with typical understatement, the results are not pretty. The complete documentary will not be available until Nov. 5. But you can view the first three parts, produced by Sensible Investing, here. It should be required…
An interesting article in Bloomberg noted that the recovery in this year’s Treasury market has been stronger than the rally predicted by every economist they queried in a recent survey. In mid-August, Bloomberg contacted 66 economists for their Sept. 30 forecasts on the 10-year yield for Treasury bonds. The 10-year yield closed on Aug. 28…
Historical market data are often misused by pundits who believe they can predict the future by looking at the past. Much of what counts these days as “financial news” is simply a parade of self-styled “pros” peering into their crystal balls and telling the rest of us how to time the market, pick outperforming stocks…
Your mutual fund manager has a solid plan for retirement. So far, it’s working beautifully. Your fund manager is fortunate to be part of a growth industry. Since 2004, assets under management have grown 124 percent. The number of U.S.-based stock and fixed income mutual funds has grown to more than 5,000. Collectively, they manage…
Proponents of evidence-based investing, myself included, doubted whether this day would ever come. Investors are now actually paying attention to the overwhelming data supporting evidence-based investing and are fleeing active management. Some of the recent developments reinforcing this growing trend are: Index funds are mainstream John Rekenthaler is the vice president of research for Morningstar….
Almost everyone believes a stock market correction is inevitable. The financial media whip up a daily frenzy of anxiety by offering conflicting views from “investment pros” on when this correction will occur. Here are some tips for dealing with the “market correction” issue. Don’t try to time the correction There is no academic evidence indicating…
An algorithm is defined as a set of detailed instructions that result in a predictable end-state from a known beginning. The discovery of an algorithm that would consistently generate outsized returns would be the holy grail of investing. The individual who came up with such an algorithm and published the methodology in a peer-reviewed journal…
All across America, a familiar ritual is repeated at least quarterly. Sponsors of 401(k) plans meet with their brokers, insurance companies or other advisers. The purpose of the meeting is to decide which funds to keep as investment options and which ones to eliminate. Everyone has a familiar role. The plan adviser comes prepared with…