To Tilt or Not to Tilt

I tilt. Do you tilt? It’s OK to tilt. Many people tilt. I’m not talking about posture or politics – I’m talking about portfolio design. A portfolio “tilt” is industry slang for an investment strategy that overweighs a particular investment style. An example would be tilting to small-cap stocks or value stocks that have historically [...]

The Risk Of Short-Term Bond Funds

Did you miss returns from intermediate-term bond funds because you sat in a short-term bond fund waiting for interest rates to rise? A lot of people did. This strategy has backfired as the opportunity cost of not being in intermediate-term bonds has been more costly than whatever damage rising interest rates might have taken away.

Exchange-Traded Confusion

Exchange-traded funds and all the products related to them have terminology that’s foreign to many investors. People hear “ETF” and they assume every product that’s called an ETF is the same. They’re not. Product structure can have big implications for investors, especially if it’s held in a taxable account.

Million-Mile View Of Investment Value

Imagine we’re on an intergalactic spaceship traveling far away from Earth. It’s a quiet day. There are no meteor storms or alien encounters to contend with. We’re sitting in the Solar Lounge discussing a topic of great interest to both of us – the root elements of investment value. Our dialogue is as follows: What defines investment value? Is it the return of an investment over time? We contemplate this and decide that return cannot be a good definition of value because inflation causes prices to rise, which is not an increase in real value. Then inflation gains are taxed by governments, which reduces real value.

3-to-1 Odds Favor Index Investors

What do 25%, 25%, 25% and 25% have in common? Besides adding up to 100%, it’s a pattern of active fund underperformance versus indexes that consistently occurs in the mutual fund marketplace.