Dean Mathey was a successful investor who served as chairman of the investment committee at Princeton from the 1920s through the 1940s. Late in his career he privately published a book called Fifty Years of Wall Street that included a section with nine lessons learned during the Great Depression, It was reprinted in the book The Investor’s…
Doubling Down on Risk
In August of 2007, we had one of the first truly large market dislocations that preceded the financial crisis. All at once, a large group of the biggest quantitatively managed hedge funds all started to get crushed at the same time. In just a couple of weeks, strategies that had worked brilliantly for years stopped…
Stressing Out About Money
There’s an old saying that stress is the difference between where you are and where you would like to be. If that’s the case there are a lot of people still trying to get to where they would like to be when it comes to their finances.
Pros & Cons of a 30 Year Fixed Rate Mortgage
I posted the following chart of the current 30 year fixed rate mortgage on Twitter last week: I said that today’s roughly 3.5% mortgage rates are going to look silly someday so not all of the low interest rate policies have hurt savers that can take advantage. If you’re able to lock in low interest…
Are Emerging Markets Still An Asset Class?
Mohamed El-Erian, the former PIMCO CEO, wrote a piece for Bloomberg View questioning the merits of emerging markets as an asset class. Before making his argument, El-Erian laid out three characteristics of an asset class, which I’ve paraphrased: The components share similar characteristics (i.e., geography, economic or financial commonalities, etc.) The majority of the components…
What You Can’t Learn From Your Heroes
Standing on the shoulders of giants by learning from the best in a given field is a great way to get a better grasp of your subject matter of choice. A favorite pastime for investors is to read and share quotes from the likes of Warren Buffett, Paul Tudor Jones, Jesse Livermore or any number…
A Historical Look at a 50/50 Portfolio
Last year I wrote about the worst 10 year returns earned on a simple 50/50 portfolio of stocks and bonds. A reader recently dug up that post and asked for some further information and a look at different scenarios on the returns of a 50/50 portfolio made up of the S&P 500 and long-term U.S….
Do Young Investors Need a Financial Advisor?
A couple weeks ago I gave some advice to a young person that was invested with a robo-advisor. I urged patience and giving up on the goal of a perfect portfolio, especially when you come to the decision that you would like to invest in a low-cost, diversified asset allocation approach. One of my younger…
What Would You Say…You Do Here?
One of the most interesting lines from the new Carl Richards book is when he talks about how hard it is to decipher the many different roles in the financial industry I know of no other industry where it’s harder to figure out who does what. It’s easy to shake your head when you read a…
A Closer Look at the U.S. Government’s Retirement Plan
The Thrift Savings Plan (TSP) is the defined contribution retirement plan for U.S. Federal government employees. The TSP has nearly 5 million participants and over $500 billion in assets under management. I’m on record saying I think the TSP should be offered to all U.S. workers in addition to their current plan (or those that…
