I have an article in the latest issue of “The Widget”, a magazine put out by the Delta ALPA Master Executive Council. Below is a copy of that article.
Read moreThe Fallacy of Time Diversification: Part 2
In my last post I made the argument that time does not necessarily reduce the risk of an investment since the standard deviation of total return actually increases with time. I discussed how you have to take into account the direction and...
Read moreThe Fallacy Of Time Diversification: Part 1
If you read my blog regularly you know I am constantly preaching about diversification. Normally I am talking about incorporating multiple asset classes and style premiums together in order to increase return while reducing volatility. Many...
Read moreDon’t Confuse Strategy With Outcome
Last year was a great year for US stocks. In fact the Russell 3000 index returned 33.55%. This bested most other indices. For example the MSCI EAFE Index (Europe/Asia/Far East) returned 22.78%, the MSCI Emerging Market Index returned -2.6%, the...
Read moreIs This Mutual Fund A Game Changer? Part 2
In last week’s post I talked about a new fund – QSPIX from AQR. It is a long/short fund that seeks to capture four style premiums across multiple asset classes and countries. Since the return of this fund is derived from sources different from...
Read moreIs This New Mutual Fund A Game Changer? Part 1
I spend a lot of my time reading new research papers and evaluating new investment products. 99% of new investment products fail to meet my high bar as something I will put my client’s money in. My due diligence process is very thorough. It...
Read moreBond Funds vs. Individual Bonds…Please Stop Driving Me Crazy
I generally try to avoid watching CNBC and other 24-hour financial networks. It seems to me that since they’re forced to fill hours of airtime with something, they often air useless, inaccurate information and have uninformed guests...
Read moreSo You Think Interest Rates Are Rising…So Does The Market
[youtube=http://www.youtube.com/watch?v=9zDjNNPAqvE&w=420&h=315] Today I discuss how the current term structure of bond yields can tell you what the market thinks interest rates will be in the future. In the video I use an example of an...
Read moreHumans Being Human
Along with Gene Fama and Lars Hanson, Robert Shiller was recently awarded the Nobel Prize in Economic Sciences for his impressive contribution to the understanding of asset prices. His biggest contributions are in the area of behavioral finance...
Read moreThe Importance of Rebalancing
[youtube=http://www.youtube.com/watch?v=b9FIgT-DYOw&w=420&h=315] The idea of rebalancing may seem counter intuitive to most people. Basically it means selling the parts of the portfolio that have been doing the best and buying the ones...
Read moreGene Fama Wins The Nobel Prize In Economic Sciences
If you are a regular reader of this blog you know I frame my investment philosophy around research performed by academia. Gene Fama’s research has definitely influenced the way I think about markets more than any other academic. He shares the...
Read moreMore About Mortgages And The Math of Bonds
In last week’s post we looked at some of the pros and cons of paying off your mortgage (most of them were pros). An argument for not paying off your mortgage was that if interest rates rise you may eventually be in a positive arbitrage position –...
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