Given the evidence on the poor performance of lottery-like stocks, why would mutual funds choose to invest in them? Larry Swedroe unpacks research that shows it may have something to do with investors’ economically irrational “taste” for such equities. Among the assumptions in the first formal asset pricing model, the CAPM, are that investors are …Read More.
Larry Swedroe turns to a new study from Andrew Berkin, his colleague and co-author, on the long-term link between equity prices and bond yields. As the director of research for Buckingham Strategic Wealth and The BAM Alliance, one of the most-asked questions I’ve gotten lately involves the impact of rising interest rates on equity prices, …Read More.
Larry Swedroe unpacks some recent research from our own Jared Kizer that shows the risk already found in a portfolio of stocks and government bonds can make owning corporate bonds redundant for many investors. A number of articles were written at the end of 2008 noting that, for the prior 40-year period, stocks had barely …Read More.
When it comes to markets, there are no clear crystal balls. Like in poker, the best you can do is put the odds in your favor and then invest (or bet) accordingly. Larry Swedroe on what poker players can teach investors about evaluating decisions. As expert poker player Annie Duke explains in her book, “Thinking …Read More.
BAM ALLIANCE member Michael Evans on factors to consider when weighing certain financial advantages to holding a mortgage, and whether it makes sense for you. I believe it’s time to take a fresh look at a timeless question: Is it better to own your home outright or maintain a mortgage? Given all the factors involved, …Read More.
Does the current empirical evidence still suggest there’s a significant benefit to including emerging markets stocks in a globally diversified portfolio? Larry Swedroe makes his case for the prudent investment strategy. Thirty years ago, emerging markets made up only about 1% of world equity market capitalization, and just 18% of global GDP. As such, the …Read More.
Larry Swedroe on a study showing why performance chasing rarely succeeds. There is a considerable body of evidence demonstrating that the post-hire performance of active managers tends to be disappointing relative to their pre-hire performance. Specifically, managers’ performance tends to regress toward zero after adjusting for expenses, risk, exposure to common factors and survivorship bias. …Read More.
Larry Swedroe looks at recent research into payout policies and the long-run drivers of expected equity returns. In their famous 1961 paper, “Dividend Policy, Growth, and the Valuation of Shares,” Merton Miller and Franco Modigliani theorized that investors should be indifferent about whether they receive distributions via dividends or buybacks, as well as how they …Read More.
Tim Maurer on why finding our path to contentment may have little to do with the dichotomy set up between the pursuit of less and the pursuit of more, scarcity versus acquisition. Having the privilege of walking through life with people vocationally, aiding in the acquisition, maintenance and dispossession of earthly resources as a financial …Read More.
Larry Swedroe unpacks the research and explores the benefits of tax-aware, long/short funds. Among the “smart beta” strategies that recently have become popular are funds that go long securities with favorable characteristics and short those with unfavorable characteristics. For example, to capture the value premium, a fund would go long value stocks and short growth …Read More.