The dispersion among individual stock returns varies over time. Low dispersion occurs when all stocks tend to move in the same direction, and high dispersion occurs when stocks tend to go their separate ways. It’s during a period of high dispersion we hear Wall Street gurus proclaim: “It’s a stock picker’s market.” The inference is that it’s easier to beat the market during these periods. That’s not true.
I’m often asked what I think about asset location strategies. This is a tax management technique where an investor places the most tax-efficient investments in the least tax-efficient account type and vice versa to reduce near-term taxes. There are advantages and disadvantages to this strategy. I believe whether you choose to do this or not is a matter of preference rather than substance.
Love and money have a lot in common. It struck me how similar these two pursuits are while reading a recent Wall Street Journal article on the pursuit of a satisfying life by Charles Murray. We seek both love and money over our lifetimes; we’re drawn to them, fight over them, agonize over them, neglect them and lose them on occasion, and then seek them again.
How important is it to watch the stock market? Not important at all. Here is advice from two of the best investors I know. “The stock market is a giant distraction from the business of investing,” says John Bogle, founder of Vanguard Group of mutual funds.
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.