I was driving with a friend recently and telling him about some projects that really excited me. I mentioned a new book I’m working on, an article I’m writing and this new hobby of adventure motorcycling in the desert. He interrupted me and said, “How do you stay so motivated and so excited about things?”…
It’s a mystery to me why so many investors pay brokers to pick “winning” mutual funds. But they do, and it turns out that they aren’t alone in this often fruitless quest. Pension funds pay obscene fees to “consultants” who claim the ability to select outperforming mutual funds or other types of investments. A flawed process The…
As the director of research for The BAM ALLIANCE, I frequently receive questions related to the advisability of purchasing payout annuities (as opposed to variable annuities, which I generally categorize as products meant to be sold, not bought). Combine the relatively poor performance of equities since 2000 (the S&P 500 returned just a little more…
The financial crisis of 2008, when all risky asset classes suffered dramatic losses, led many investors to seek out “alternative” investments that claimed to provide downside protection, or positive returns independent of the market environment. This resulted in the introduction of a new segment of mutual funds that operate at the intersection of traditional mutual…
The Shiller cyclically adjusted (for inflation) price-to-earnings ratio—referred to as the CAPE 10 because it averages the last 10 years’ earnings and adjusts them for inflation—is a metric used by many to determine whether the market is undervalued, fairly valued or overvalued. Employing a 10-year average for earnings, instead of the most current 12-month earnings,…
The prevailing wisdom is that the market for equities in emerging markets is less efficient than in developed markets. Unfortunately, the evidence doesn’t support this hypothesis. For instance, the S&P Indices Versus Active (SPIVA) scorecard showed that over the 10-year period ending June 2015, 92% of actively managed emerging market funds underperformed their benchmark, the…
Now that more financial professionals are going to have to act in their customer’s best interest, where can you actually find someone who will really, truly, for sure do that? It seems like a simple question, but it’s not. I’ve been around the financial planning industry for 20 years, and one of the hardest (and…
Most investors believe all passively managed funds within the same asset class should have the same, or at least very similar, returns. However, while all index funds and passive structured asset class funds are similar in the way that rectangles and squares are similar, they are also very different. All squares are rectangles, but not…
I talk to many people who have problems with spending. Sometimes it’s friends. Sometimes it’s co-workers. Sometimes it’s neighbors. And yes, sometimes I talk to myself about my own struggles. What I’ve discovered over the years is that most of our problems do not come down to income. Instead, we don’t notice enough. Spending mindlessly,…
Capital committed to private equity (PE) funds worldwide has risen substantially in the last two decades, thanks largely to U.S. pension funds searching for alternatives to public equity markets that might help them meet their return objectives. Endowments seeking to replicate the successes of the Yale Endowment have also contributed to the growth of PE…
Most investors believe all passively managed funds within the same asset class should have the same, or at least very similar, returns. However, while all index funds and passive structured asset class funds are similar in the way that rectangles and squares are similar, they are also very different. All squares are rectangles, but not…
Earlier in my career, I switched firms. The change meant I left a position where I couldn’t legally call myself a fiduciary. But at the new firm, I was required to be one. I was super excited. Finally, I could tell my clients just how great it would be for me to act as a…
“Carl,” my friend told me, in a heated moment of financial debate, “You need a new truck like you need a bullet in the head.” I fired something back about how off base she was, how it would be a sound purchase, and who was she to say anyway? We went back and forth. It…
There’s a lot of talk in the media about “low-information” voters. Ted Cruz may be responsible for coining the term. He referred to supporters of Donald Trump as those “who have relatively low information, who are not that engaged and who are angry.” He observed that other candidates are beating Trump “when voters get more engaged and…
“A lot of career advice begins right back at age six,” writes author Chris Guillebeau in his newest book, Born for This: How to Find the Work You Were Meant to Do. But in case you’re expecting some fluffy self-help propaganda that over-inflates your ego in an attempt to win your purchase of the book,…