I was having a cup of coffee at the local java shop and overheard a guy talking with his friend about investing. It went something like this, “Just about the time I started making money, the system screwed me.” Wow! This is too good to mind my own business. I leaned in a little closer… [...]
When Fund Selection is Done Right
May 2, 2013 By
What funds should you buy? Should it be index funds or exchange-traded funds, or low-cost actively managed funds, or should you pay an adviser for access to special products like DFA funds? This is an important question — but it’s often the wrong question. The products used to construct a portfolio are a function of a portfolio’s purpose. Get the purpose right first and then select the product.
A Sharpe Assault on Mutual Fund Fees
April 11, 2013 By
Mutual fund expenses may be making you poorer. Investing in actively-managed mutual funds that charge high fees can lower your standard of living in retirement by as much as one-third over a low-cost index fund strategy. This is the conclusion of Nobel Laureate William Sharpe in his latest Financial Analysts Journal article The Arithmetic of Investment Expenses.
Busting the Sell in May and Go Away Myth
April 8, 2013 By
There is a belief among many investors that excess returns can be earned in the market by owning stocks for only 6 months out of the year and sitting the rest of the time in interest-bearing Treasury securities. This market-timing strategy is commonly known as Sell in May and Go Away because the exit period is May. CXO Advisory took a look at “Sell in May” over the long-term to determine if this belief was fact or fiction.
Index Fund Returns Get Better with Age
April 4, 2013 By
Index fund returns keep getting better the longer you hold them. This is because low-cost index funds give you more of the market’s return and because many actively-managed funds eventually go under. A combination of cost savings and longevity help index fund returns float to the top in rankings.
