Humans can be a competitive lot. The way we posture and position ourselves to stand out in a group seems to happen instinctively. After all, in the past we competed for resources and survival. Our lives depended on it. Today, we still compete, but for different reasons. Instead of food, we compete for attention and…
The February 9 edition of Barron’s contained its annual listing of “best fund families” for the past one, five and 10 calendar years. Of all the fund families on the list, Invesco was the only one that managed to make the top four in each of the periods. In fact, it was the only fund…
The first formal asset pricing model—the capital asset pricing model—was built on certain assumptions, including that investors are risk-averse; will maximize the expected utility of absolute wealth; and care only about the mean and variance of return. However, academic research has found that these assumptions don’t necessarily hold. In the real world, some investors have…
As the director of research for The BAM Alliance, and the author and co-author of 15 investment books, I’m often asked about other books I would recommend. For serious investors who want to gain a deeper understanding of how markets work and the strategies most likely to allow them to achieve their financial goals, my…
Even many advocates of active management will concede that the efficiency of the market for U.S. large-cap stocks is so great that attempts to add value (generate alpha) through individual stock selection and/or market timing are unlikely to produce positive results. However, they cling religiously to the notion that active management remains the winning strategy…
“Level is dedicated to rewriting the financial rulebook to create a secure future for the next generation.” That’s budgeting app Level Money’s stated mission, which can be found on their website’s “About Us” page. But even as lofty as that objective sounds, co-founder and CEO Jake Fuentes says the company’s sights are set even higher….
The battle over the legal standard to which advisors should be held when giving investment advice has two fronts: Advice given by advisors to retirement plans and advice given by advisors to everyone else, including individual investors. The position of the Department of Labor and the SEC The U.S. Department of Labor (DOL) has already…
A few weeks ago, I got home late after a long trip. I’d been traveling a lot recently and didn’t sleep well that night. The next morning, I woke up and felt like I’d been hit by a truck. Emotionally, I was at a really low point. When I came downstairs that morning, I asked…
The academic study of price momentum has intensified considerably since 1993, the year Narasimhan Jegadeesh and Sheridan Titman’s paper, “Returns to Buying Winners and Selling Losers: Implications for Stock Market Efficiency,” appeared in The Journal of Finance. The authors found that buying winning stocks and selling losers generated significant positive returns over three- to 12-month…
Unit investment trusts (UITs) are SEC-regulated investment vehicles in which a portfolio of securities is selected by a sponsor and then deposited into a trust. Assets held in UITs have grown steadily since the financial crisis, increasing from about $20 billion at the close of 2008 to about $87 billion by the end of 2013….
Much has been written about the perils of overconfidence in investing. Nobel laureate Daniel Kahneman reported one compelling study in his book, Thinking, Fast and Slow. CFOs are overconfident You might think CFOs of large corporations would have valuable insight about something as basic as projecting the returns of the S&P 500 index. The data,…
The Federal Reserve has signaled that interest rates will eventually rise. It may be tempting to conclude that, with diligence and perseverance, you could uncover a way to profit from this knowledge. If you find yourself enticed by this possibility, the question you need to ask is, “What do I know about what the Fed…
When choosing a fund manager, there are a wide variety of characteristics an investor can evaluate. Common points of assessment include: Educational background: What degrees has the fund manager earned, and from what schools? Is the fund manager a certified financial adviser (CFA)? Professional experience: Does the portfolio manager have previous experience on the research…
A June 2012 study authored by University of Rochester professor Robert Novy-Marx, “The Other Side of Value: The Gross Profitability Premium,” not only provided investors with new insights into the cross section of stocks returns, but also led to the development of new factor models that incorporate a profitability factor. Novy-Marx’s Findings Before unpacking a…
Humans can be a competitive lot. The way we posture and position ourselves to stand out in a group seems to happen instinctively. After all, in the past we competed for resources and survival. Our lives depended on it. Today, we still compete, but for different reasons. Instead of food, we compete for attention and…