Each January, I put together a list of predictions that financial “gurus” have made for the upcoming year—sort of a consensus of “sure things.” I then keep track of whether or not these “sure thing” predictions have actually come to pass. The turn of the calendar into April means that it’s time for our first…
One of my favorite films is “Moonstruck.” It contains a great scene—one I often use when discussing investment strategies I’m asked to review in my role as the director of research for The BAM ALLIANCE, because it makes an excellent and pointed observation. In the scene, Cosmo Castorini, a plumber, explains to a young couple…
Recently, a blog post by Chris Marx, a senior portfolio manager for equities at New York-based AllianceBernstein (AB), came to my attention. In it, Marx commented on a March 9, 2015 article in The Wall Street Journal that highlighted the reality that today’s investors should have lower expectations for future returns because valuations are now…
Human beings don’t like uncertainty, especially when we’re contemplating our financial futures. It’s not enough for us to think that we’ll have enough money to send our kids to college, or to retire. We want to know exactly how much money we’ll need to achieve those goals — and precisely how we’re going to get…
Recent events have led me to conclude that, at least in some ways, the U.K. is ahead of the United States when it comes to investing. The first—and by far the most important—reason I have for drawing such a conclusion is that in January 2013, all licensed financial advisors in the U.K.were required to become…
I’m sure Jim Cramer will be the last one to leave the burning building, but the era of stock picking is basically over. He continues to talk about index funds as being adequate for those who don’t have the time to research individual stocks, but investors — in increasing numbers — are too smart to…
If you’re like most Americans, you may be confused, or even paralyzed, when it comes to developing a financial plan. In fact, most investors I’ve met—including many of those who have a relationship with a stockbroker—don’t have a written investment plan, let alone an overall financial plan designed to incorporate estate planning and risk management…
You made a huge mistake last year with your money. You know this now, right? The only investments in your portfolio that did very well were probably United States stocks. Bonds may have held their own, but everything else was just pitiful. International stocks performed horribly and emerging markets weren’t much better. What were you…
As sure as the sun rises in the east, the start of each year brings with it a fresh wave of assurances from the “gurus” who appear in the financial media that this year will be a stock picker’s year. And as sure as the sun sets in the west, the year invariably ends with…
When I look at hedge funds, there are three data points that keep bothering me. They create a pattern that doesn’t make a lot of sense. I hope you can help me understand what I’m missing. 1. Hedge fund performance has been terrible. In 2014, the Barclay Hedge Fund Index returned 2.88 percent. In that…
In 2014, the HFRX Global Hedge Fund Index lost 0.6 percent, underperforming the S&P 500 Index by 14.3 percentage points. And while the index outperformed foreign equities, which generally lost between about 2 and 5 percent, it underperformed virtually riskless one-year Treasury notes, which returned 0.2 percent. It also underperformed a typical, globally diversified and…
An overwhelming amount of evidence exists to clearly demonstrate that, in aggregate, active management is a loser’s game. And this is true regardless of whether markets are efficient or inefficient, or whether they are in a bull or bear phase. But if the evidence doesn’t convince you, perhaps some of the market’s smartest and most-well-respected…
This is the time of year when investment boards and committees in charge of selecting fund managers for pension plans and 401(k) plans gather for a time-honored ritual. They review the past performance of their fund managers and decide whether to keep or replace them. The point of this elaborate and lengthy exercise is to…
When I look at hedge funds, there are three data points that keep bothering me. They create a pattern that doesn’t make a lot of sense. I hope you can help me understand what I’m missing. 1. Hedge fund performance has been terrible. In 2014, the Barclay Hedge Fund Index returned 2.88 percent. In that same…
The investment successes of the Yale Endowment led many other endowments, foundations and even high-net-worth individuals to consider adopting the so-called “Yale Model.” The model included a focus on alternative investments and attempts to capture the liquidity premium available in illiquid investments, such as private equity and hedge funds. In his new book, Asset Management:…