On paper, your investments in stocks, real estate or even cash may look like your greatest assets. While all those things are superimportant, you have something else that’s even more valuable. It’s the investment called you. Finding ways to increase your value while doing the things you love may be the most important thing you…
For many market observers and participants, billionaire Seth Klarman resides in the same “ZIP code” that Warren Buffett once called the home of superstar investors: “Graham and Doddsville.” Klarman is the well-regarded founder and CEO of the Baupost Group, a Boston-based private investment partnership with nearly $30 billion in assets under management. He has also…
In a series of previous articles on Seth Klarman’s book, “Margin of Safety: Risk-Averse Value Investing Strategies for the Thoughtful Investor,” I showed how his statement that indexing assures mediocre returns was very clearly incorrect. I demonstrated as well that many of his additional contentions about indexing and market efficiency were also false. Today I’ll…
Professors Eugene Fama and Kenneth French have a new paper, “Incremental Variables and the Investment Opportunity Set,” that provides some important insights for investors considering funds designed to supply exposure to multiple factors, or styles, of investing. In their study, they note: “Much asset pricing research is a search for variables that improve understanding of…
This document covers several key issues as you plan for retirement and is divided into four sections: Section 1: Determining How Much to Save and Spend Section 2: Portfolio Management Section 3: Risk Management Section 4: Maximizing Social Security Benefits Section 1: Determining How Much to Save and Spend Estimating a Retirement Spending Amount If…
In a podcast interview posted last week, Tim O’Neill, global co-head of Goldman Sachs’ investment management division, warned investors that if passive investing gets too big, the market won’t work. He then added: “So in terms of the size, a market needs both active and passive investing, because if everybody’s a passive investor, there’s no…
Every January, I put together a list of predictions that financial “gurus” have made for the upcoming year, especially the ones that gain consensus as “sure things.” I then keep track of whether these “sure thing” forecasts actually came to pass, through a series of periodic updates. The inevitable turn of the calendar into October…
My book, “Investment Mistakes Even Smart Investors Make and How to Avoid Them,” covered 77 common errors I believe investors commit all too often. I know today there’s at least one more I should have included: discussing individual stock buys or sells at the water cooler. Evidence from the field of psychology emphasizes the strength…
Imagine a hypothetical guy who lives a responsible financial life. He’s focused on meeting his obligations, even though he doesn’t have a big cushion when it comes to his take-home pay. Things are tight. He’s not quite living paycheck-to-paycheck, but it’s close. Then one day, an external shock completely outside his control occurs, and it…
If anyone could demonstrate expertise in “beating the market,” you would think it would be hedge fund managers. They get paid hefty fees (often 2 percent of assets under management plus 20 percent of profits) to generate “alpha.” Successful hedge fund managers make obscene amounts of money. The top hedge fund managers earned in excess…
The market has been experiencing gut-wrenching volatility recently. Monday, Aug. 24 was a particularly unsettling day. The Dow Jones Industrial Average (DJIA) lost 1,089 points before rallying to close down 588. This kind of roller coaster ride creates understandable anxiety among investors. Should you sell and sit on the sidelines, waiting for the market to…
“It was totally worth it.” In this case, “it” referred to a Vitamix blender that a friend recently had purchased. He wasn’t the first. Indeed, I don’t know anyone who has purchased a Vitamix blender and didn’t share my friend’s effusive sentiment, even after spending between $429 and $719 (for the new line of G-Series…
Looking to avail yourself of a financial advisor’s services but stumped as to how to pick one? Who better to tell you what to look for than a financial advisor himself? “I believe there are four minimum requirements for anyone you’re considering working with,” said Tim Maurer, certified financial planner and director of personal finance…
The midyear S&P Indices Versus Active (SPIVA) domestic scorecard provides another example of why (at least when it comes to the overall results of active management relative to appropriate benchmarks) the past is, in fact, prologue. Let’s review some of the highlights from the June 2015 scorecard. The table below shows the percentage of active…
Investing is a unique business. After all, you wouldn’t think of buying any commercial item (like a car) without first negotiating for the lowest price. And few people would consider buying a product if they had no information about its price tag. Yet that is precisely what most investors do. They have no idea how…