William Bernstein joined a number of prominent investors by offering a sobering outlook for the future performance prospects on a traditional U.S. stock/bond portfolio: ETF.com: As you take measure of markets, what are the key takeaways right now? Bill Bernstein: Well, I would say that the expected return of a balanced portfolio is the lowest…
The Psychology of Sitting in Cash
A reader asks: I took one piece of advice from a close friend that the market was too high and that I should go to cash and wait for a correction. I am still waiting. How do I proceed from the position I have of feet embedded in concrete? Since I started this website, this is by…
Advice For a Young Robo-Investor on Asset Allocation
A young investor with robo-advisor Wealthfront is seeking advice based on his 2014 performance. Here’s what he posted on the Bogleheads forum: I have aggressive profile on wealthfront (9.3 out of 10). My return for 2014 is paltry 1.3% compared to S&P. Wondering if I should ditch them or stay with them. Then he shared his…
What’s In a (Mutual Fund’s) Name?
From last weekend’s Barron’s: With nearly half of the companies in the Standard & Poor’s 500 paying a dividend yield greater than the 10-year Treasury bond’s recent 2.11%, investing in dividend-oriented mutual funds would seem like a good idea. But many funds promise more than they deliver, and investors are apt to be disappointed with…
Why It’s So Hard to Change Your Mind About the Markets
“I’m only rich because I know when I’m wrong. I basically have survived by recognizing my mistakes.” – George Soros One of the worst things about the markets is the fact investors get instant feedback on their decisions. Any time you make a purchase or a sale you can check up-to-the-minute price quotes to see if…
Behavioral Experts Behaving Badly
Rory Sutherland is Vice Chairman at Ogilvy & Mather, an international advertising agency whose founder, David Ogilvy, is said to be the inspiration for the Don Draper character on Mad Men. Sutherland is an expert on behavioral economics and human psychology. Sales and marketing departments were utilizing behavioral psychology on unsuspecting customers decades before it…
An Alternative to the 60/40 Portfolio
I’ve made the argument lately that I think even if bonds perform poorly from their current low yields that they could still serve a purpose as a portfolio diversifier (see here and here). Many readers have told me that, even though they understand the arguments I’m making, it doesn’t make sense to hold bonds in…
Investor Behavior Following Large Gains & Losses
The following is a passage from The Quants by Scott Patterson: Meanwhile, a fund with ties to Nassim Taleb, Universa Investments, was also hitting on all cylinders. Funds run by Universa, managed and owned by Taleb’s longtime collaborator Mark Spitznagel, gained as much as 150 percent in 2008 on its bet that the market is far…
The Blueprint for a Bond Bear Market?
Bond investors are in constant fear of a replay of the 1970s when interest rates exploded higher in concert with sky high inflation, a double whammy of bad news for fixed income securities. But it doesn’t make much sense to compare the current set-up with that scenario. By 1970 the 10 year treasury yield was…
My Biggest Investing Mistake
J. Lukas Neely from the Endless Rise Investor has a nice piece up that highlights the mistakes of 13 different investors and how they went about fixing them. Neely put together a really great line-up of people for this including William Bernstein, David Merkel and Tobias Carlisle to name a few.
