The Benefits of Writing

A few weeks ago I talked with Robin Powell about our upcoming Evidence-Based Investing Conference and a host of other topics. He asked me what my motives are for writing this blog. I don’t usually put much thought into this but here’s my answer: I was never much of a writer before starting my site, but…

Do Institutional Consultants Add Value Picking Money Managers?

I grew up in the finance industry working in the institutional consulting world. Most consultants provide a wide range of services but what they’re all really selling is their due diligence capabilities for choosing money managers to invest on behalf of these large pools of capital. They often use buzzwords like ‘alpha’ and ‘access’ to get…

Is the Value Premium Disappearing?

The value premium has been talked about in investment circles going all the way back to the 1934 release of Benjamin Graham’s Security Analysis. At its core value investing relies on buying undervalued securities, something every investor can or should be able to intuitively understand. You buy stocks for less than their fundamental value, wait until that…

The Greatest Bubble of All-Time?

Thinking and acting long-term for the long-term is one of the few edges remaining in the markets. Bring up this idea and there will almost always be someone waiting to take the other side with the ‘what about Japan?’ argument. Japan’s two-and-half decade economic and market struggles make for some important lessons but most investors…

Reflections on Year One in the RIA World

I started working with the team at Ritholtz Wealth Management one year ago this week. It’s been a wonderful experience so far to work with such great colleagues and clients. But it’s also been a great learning experience for me, as well. I had never worked for an RIA (registered independent advisor) before. My previous roles…

The John Bogle Expected Return Formula

I caught Vangaurd’s John Bogle on a recent Bloomberg interview discussing his simple formula for estimating future stock market returns: I have a reasonable expectations kind of formula that I’ve been using for 25 years and it’s worked the whole 25 years almost perfectly. There’s some decades where it doesn’t work as well as it…

An Allocation Only a Mother Could Love

GMO’s Jeremy Grantham and Lucas White came out with a report entitled An Investment Only a Mother Could Love this past week laying out the prospects for natural resource equities. Here’s the executive summary of their findings and thoughts: We believe the prices of many commodities will rise in the decades to come due to…

Cialdini’s 6 Principles of Influence & Persuasion

There is a new Robert Cialdini book out this week — Pre-Suasion: A Revolutionary Way to Influence and Persuade. I have it on my Kindle but have just started reading it. I’m sure I’ll have more to say when I finish it in the coming weeks. The reason I’m so excited about this new effort…

Updating Wall Street Cliches

Pundits are notorious for using phrases and cliches that make them sound intelligent but don’t really tell you anything. Many of these cliches have been used for decades now so I thought it was time for some updates to reflect the sentiment during the latest cycle. For example, ‘It’s a stock-picker’s market’ can now be…

Survivorship Bias Explained

Long Term Capital Management is a perfect example of how hubris can derail even the most brilliant of investors. The hedge fund was filled with PhDs and Nobel Laureates, but was highly leveraged while relying far too heavily on quantitative risk models that didn’t factor in the potential for unexpected events to occur. When Russia defaulted on…