Institutional investors are often referred to as the ‘smart money’ or ‘sophisticated investors.’ For some funds this is true, but many of these large pools of capital make the same exact mistakes as mom and pop retail investors. It’s just that the reasons are different. Here are a few studies to consider: One study looked…

Investors have a habit of thinking in terms of extremes. Active or passive. All-in the markets or all-out. Stocks are either topping out or about to bottom. Markets are perfectly efficient or wildly inefficient.

Last week I talked to a group of college students in a portfolio management class at one of the local universities here in Michigan. The topic was open-ended so I wanted to share with them a few of the things I wish I would have learned in school that weren’t taught or apparent to me…

Last week I shared some of my thoughts on hedge funds. In a follow-up to that piece I want to discuss some of the reasons that institutions and wealthy individuals allocate money to hedge funds. I’m not so much concerned with Sharpe Ratios and non-correlated returns. What fascinates me most about the investment business is…

I spent the earlier part of this week in Milan and Rome speaking to a large group of financial advisors for Banca Mediolanum, a large bank in Italy. It was a great experience, and not just because it gave me the opportunity to travel throughout Italy. I also came away with some interesting takeaways on…

A number of media outlets have picked up on the five-year return estimates that Vanguard’s global head of investment strategy, Joe Davis, put out at last week’s Morningstar ETF Conference. Here’s what he had to say, via the latest Mutual Fund Observer: Given the fragility of the global economy, Vanguard does not see interest rates being…

Hedge funds are a lightning rod in the financial industry. The most vocal critics and proponents both offer extreme views that paint a very different picture of the same topic. Some will bash hedge funds no matter what while others rush to their defense anytime they’re criticized. On the one hand you have the critics…

From the highs reached in early spring, the S&P 500 is now down roughly 12%. International stocks (MSCI EAFE) and small caps (Russell 2000) are down even more, as both have fallen roughly 17% from their 52-week highs.

I’m a huge fan of standing on the shoulders of giants to learn as much as I can from others. When I started this website a couple years ago one of the first things I did was study the writing styles and websites of some of my favorite blogs. The two that I spent the…

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…