Adam M. Grossman

INFLATION THIS YEAR has been running at more than four times the Federal Reserve’s target of 2%, forcing the central bank to raise interest rates multiple times. As a result, both the stock market and the bond market have been struggling. This has investors searching for alternatives.

At the top of the list for many people is gold, which gained a reputation as a bulwark against inflation in the 1970s. During that decade, when inflation was running hot,

INSURANCE COMPANIES are disproportionately represented among the world’s oldest companies. John Hancock was founded in the 1860s. Cigna dates to the 1700s. Some insurers are even older. Why is that?

In my opinion, it’s because they employ a strategy called asset-liability matching. In simple terms, insurers organize their finances so cash is always available when they need it.

Let’s say each winter typically results in $100 million of auto claims for a particular insurer.

JAMES J. CHOI is a finance professor at Yale University. But in a recent paper titled “Popular Personal Financial Advice versus the Professors,” Choi played the role of (somewhat) neutral arbiter. The question he sought to answer: Do popular—that is, non-academic—personal finance books offer advice consistent with the academic literature? And if not, is that a problem?

To conduct his study, Choi looked at 50 personal finance titles including The Millionaire Next Door, 

YOU MAY BE FAMILIAR with the term ESG. This is an investment approach that—in addition to traditional financial metrics—also weighs environmental, social and corporate governance considerations when picking investments.
ESG isn’t new, but it’s stirred up a fair amount of controversy recently. As an investor, it’s worth understanding what the debate is about and how you might navigate it.
ESG has been around for years, but its popularity has recently hit an inflection point.

EXCHANGE-TRADED funds are popular, but their complex structure makes them difficult to understand. A question I hear frequently: Are exchange-traded funds (ETFs) more tax-efficient than traditional mutual funds?
The evidence suggests they are. One recent study found that ETFs distribute capital gains to shareholders much less frequently than traditional mutual funds and, when they do, those gains are smaller. It’s worth understanding why that’s the case.
Let’s first look at the mechanics of a traditional mutual fund.

I GOT AN ANGUISHED call from an investor last week. Let’s call her Emily. Emily’s accountant was finishing up her tax return and was surprised to see a $113,000 capital gain. The explanation turned out to be just as surprising.
The issue stemmed from a well-intentioned move by Vanguard Group. In late 2020, the firm announced it was broadening access to a set of lower-cost mutual fund share classes.
Mutual fund share classes are like fare classes on an airplane.

THE ENGLISH POET Alfred Tennyson wrote that it is “better to have loved and lost than to have never loved at all.” When it comes to matters of the heart, maybe Tennyson was right. But when it comes to personal finance, I’m not sure that’s the case. If you’ve ever seen a gain slip through your fingers, you know the feeling of regret can be powerful.
Two conversations last week prompted me to take a closer look at this topic.

AT THE MUTUAL FUND company where I once worked, the stock and bond teams liked to poke fun at one another. Bond managers viewed the stock-pickers as overpaid storytellers. Meanwhile, the stock-pickers saw the world of bonds as stultifying. “Playing for nickels and dimes” is how one of them put it.
For better or worse, bonds do indeed represent the slow lane. But this year, with bond prices depressed by rising interest rates, investors are wanting to learn more.

THE MEGA MILLIONS drawing on Friday was worth more than $1 billion. Would you be happy if you’d been the lucky winner?
Last week, I talked about the Vanderbilts. Once the wealthiest family in America, they saw their fortune dwindle because of aggressive spending. Back in the 1890s, for example, the family spent $7 million building the Breakers, a summer home in Newport, Rhode Island. That’s the equivalent of $220 million today. When it was completed,

WHEN HE DIED IN 1877, Cornelius “Commodore” Vanderbilt was by far the wealthiest American, with a fortune of $100 million. In the 10 years after his death, his son William succeeded in further doubling those assets. It was an astonishing level of wealth. But that’s precisely when things began to turn.
One of Cornelius’s grandsons built the 125,000-square-foot Breakers mansion in Newport. Another commissioned Biltmore in North Carolina, which is still the largest home in America.

I RECEIVED A CALL last week from a college student who’d started a successful business. His school, he said, didn’t offer any practical courses in personal finance, so he asked my advice on investing.
We walked through nine key questions. I would offer the same advice to investors of any age.
1. Why should I expect stocks to go up? One way to answer this question would be to invoke the oft-quoted phrase that “history doesn’t repeat itself but it often rhymes.” Stocks have delivered roughly 10% returns per year since reliable recordkeeping began in the 1920s.

U.S. STOCKS ARE DOWN almost 19% so far this year. The broad bond market, surprisingly, has also lost money, sliding almost 11%.

At times like this—when the headlines are almost all negative—the standard advice is to avoid panicking and stay focused on the long term. I agree with that, and indeed the data are clear: Investors who attempt to time the market with “tactical” trades often suffer whipsaw. But that doesn’t mean we should bury our heads in the sand.

A FEW WEEKS BACK, I mentioned Robert Shiller’s book Narrative Economics. His contention: Stories—to a surprising degree—often drive markets.
Similarly, the investment world is driven by a good number of sayings and aphorisms. Many of these are entertaining. Some are even useful. But they can also be tricky. Any time advice is delivered in a pithy phrase, it seems to carry extra credibility—as if it were a truth handed down from above.

I ARGUED LAST WEEK that bitcoin wasn’t a great investment. The reality: Only a minority of investors hold cryptocurrencies, which is a good thing, in my opinion. But there are, alas, many other ways to get off track when building a portfolio.

In fact, if I ever wrote an investment book, it might be in the style of Dr. Seuss and titled Oh, the Investments I’ve Seen. Want to build a sensible portfolio and avoid common pitfalls?

SINCE THE START OF the year, the stock market has dropped almost 24%. That’s significant, but it pales next to the losses suffered by cryptocurrency investors, with the shellacking continuing into this weekend.
Dogecoin is down more than 90%, and smaller currencies like terra have lost essentially all their value. Even bitcoin and ethereum, which are much more established, have suffered big losses. Ethereum is down around 75% year-to-date, and bitcoin has fallen some 60%.