I received some great feedback on my post from my post earlier this week on the challenges involved with beating the market (see: Something Most Investors Simply Cannot Accept). But some people seemed to misinterpret my message. The point of showing the statistics on the underperformance of active management is not necessarily to convince someone…
The Experience Fallacy
It’s been forever and a day since the Fed last raised rates so I keep seeing headlines or hear people say some variation of the following: There’s a huge group of young traders and investors who have NEVER lived through a rising rate environment. There are other examples people use as well — a highly inflationary…
Not All Interest Rates Are Created Equal
All eyes are on the Fed this week as everyone is focused on whether or not they’ll finally raise short-term interest rates. The game of will they/won’t they has been playing out for some time now as it’s been nearly a decade since the Fed last raised their benchmark Fed Funds Rate.
Alpha Architect on Momentum & Trend Following Rules
A couple months ago I wrote a post on Gary Antonacci’s book, Dual Momentum, and received a ton of questions and reader feedback on his absolute and relative momentum trend-following rules. I’ve been meaning to write a follow-up.
Something Most Investors Simply Cannot Accept
“There’s only one absolute truth about investing…it isn’t easy.” – Howard Marks Investing is hard. Markets are extremely challenging. Beating the market is not easy. Coming to these realizations is maybe the hardest part about investing because we all like to assume that we’re above average. Case in point — a few years ago MarketWatch columnist…
Money Advice For Young People: Managing Money When There is None
Last week a received a call from a reporter from VICE named Allie Conti, who is setting out on a journey to learn about managing money. Like many of her fellow Millennials, Ms. Conti doesn’t have much experience with the markets, investing or even general personal finance: I never learned about “mutual funds” or “index…
Avoiding the Certainty Trap
Data availability is something of a double-edged sword in today’s financial markets. On the one hand, we now have a nearly unlimited supply of research, opinions, back-tests and historical simulations with which to base our investment views upon. On the other hand, the fact that we have more information available at our fingertips than ever…
Definitions for Financial Consumers
A few half-truth definitions from the world of finance: Due Diligence: My boss told me to sell this product. Proprietary: You’ll never understand it and the fees are much higher to boot. Volatility: When stocks go down. Prospectus: A 200-page document written and designed by lawyers to be so boring and detail-oriented that no investor will ever…
6 Reasons For David Swensen’s Success at Yale
In my book I devoted an entire chapter to the institutional investment world because that’s where I’ve spent my time in this business over the years. Many of those pages were devoted to Yale’s David Swensen, who I described as the Warren Buffett of institutional investing. Swensen wrote the bible on how to think about…
In Defense of Risk Parity (Or Any Long-Term Strategy)
Whenever markets fall investors look for comfort anywhere they can find it. Two favorite investor past-times include (1) finding someone or something to blame and (2) seeking out other investors or strategies that are performing worse than you are. It doesn’t make any sense, but for some reason people find solace in the relative misery…
