Cheapskates Win

William Ehart  |  Jun 2, 2023

NEW MORNINGSTAR research on bond funds echoes what the late Jack Bogle preached—and proved—for decades: Costs are the greatest predictor of fund performance, not stock or bond selection prowess. In investing, you get what you don’t pay for, said Bogle, Vanguard Group’s founder and creator of the first index mutual fund.

There’s a school of thought that claims it’s easier for active bond fund managers to beat their indexes than it is for their stock fund colleagues.

Read More

Skill or Luck?

Philip Stein  |  May 26, 2023

NASSIM NICHOLAS TALEB has written a trilogy on the topic of chance: Fooled by Randomness, The Black Swan and Antifragile. I didn’t find these three books to be easy reading, plus Taleb has strong opinions, which may turn off some readers. Still, there’s a host of investment lessons to be culled from his works.
Taleb argues that randomness plays a powerful role in financial markets and,

Read More

I Buy, I Sell

Richard Connor  |  May 18, 2023

SERIES I SAVINGS bonds have garnered a lot of press over the past year. Thanks to higher inflation, these bonds have become a lot more attractive. Although savings bonds have historically been a go-to gift for birthdays, baptisms and bar mitzvahs, they’re more complicated than you might think. I bonds have a number of features that can confuse the average investor, me included.
Series I savings bonds, or I bonds, are designed to protect an investor from losing money to inflation.

Read More

Needles in Haystacks

Adam M. Grossman  |  May 14, 2023

LOOK AT THE STOCK market, and you’ll see that certain stocks often do better than others. Technology shares have been standout performers over the past 10 years, and health care stocks have done very well.
But research has also found that certain types of stocks have done better than others. Smaller-company stocks, for example, have outpaced those of larger firms. In the academic literature, characteristics like this, which are correlated with outperformance,

Read More

The Price Isn’t Right

Steve Abramowitz  |  May 4, 2023

YOU’VE PROBABLY HAD the same experience I’ve had when shopping for clothes. Spring’s in the air—a great time to take advantage of the local clothing store’s annual winter clearance sale. You buy that Ralph Lauren cashmere sweater at 20% off and jaunt home basking in glory. But the next day, while out for a walk, you peek at the store’s window display and see the same sweater, but now marked down 30%. You return home bemoaning your impulsivity.

Read More

Healthy Choices

Steve Abramowitz  |  Apr 25, 2023

YOU’VE PROBABLY never heard of Carolyn Lynch. Shopping for groceries, she noticed a new display of panty hose packaged in colorful plastic eggs. She bought a pair, tried them on and loved them. She told her husband, Peter Lynch, the celebrated manager of Fidelity Magellan Fund and vocal advocate of “investing in what you know.” He promptly bought the stock. L’eggs became one of the most successful women’s consumer products of the 1970s.
I recently had my own L’eggs moment.

Read More

Changing My Mind

Adam M. Grossman  |  Apr 23, 2023

A FEW YEARS BACK, I related a story about the comedian Joan Rivers. Her daughter, Melissa, likes to joke that her mother was always very consistent. Wherever she was, she would always drive at 40 miles per hour, whether it was on the highway, in a school zone or in the driveway.
This is funny, but it also illustrates a key challenge for investors. On the one hand, it’s important to be consistent. But at the same time,

Read More

Don’t Go Away

Steve Abramowitz  |  Apr 14, 2023

EMBARRASSED BY YOUR impulse to try the “sell in May and go away” gambit? Don’t be. You’re in good company. Selling stocks in the spring and returning in autumn was a favorite pastime of London financiers and bankers, who abandoned the steamy city for cooler vacation destinations. They resumed stock trading around St. Leger’s, the day of the last leg of English horse racing’s Triple Crown.
The tendency of global stock markets to rise less in the six months from May to October,

Read More

Saved by Compounding

Philip Stein  |  Apr 13, 2023

IF I MADE A LIST of all the dumb things investors do, I likely committed them all. I chased performance, sold stocks in a bear market, invested in things I didn’t understand—you get the picture.
Yet, despite the numerous setbacks I suffered before I matured as an investor, I was able to retire comfortably. How was that possible? My conclusion: compound growth. Indeed, I believe compounding is a surer way to wealth than picking market-beating investments.

Read More

Risky Business

Adam M. Grossman  |  Apr 9, 2023

OPEN A FINANCE textbook, and you’ll find discussions of volatility and beta, value-at-risk, the Sharpe ratio, the Sortino ratio, the Treynor ratio and many other quantitative tools for measuring risk. But what should you make of these metrics? Are they an effective way to control risk in your portfolio?
These tools do have decades of research behind them, and they can be useful. But I believe they’re also incomplete. Worse yet, they can be misleading.

Read More

Paid With Pain

John Lim  |  Apr 5, 2023

INVESTING IS PRETTY simple. If you don’t need to touch your money for 10 years or so, a good chunk of it can be invested in a globally diversified basket of stocks, preferably using very low-cost index funds. The likelihood that your stock holdings will have lost money after a decade is quite low, and exceedingly low if your holding period is 15 years or longer. Moreover, your investment is likely to outperform all other asset classes,

Read More

Building a Barbell

Adam M. Grossman  |  Apr 2, 2023

IN THE WEEKS SINCE Silicon Valley Bank (SVB) disintegrated, there’s been a fair amount of post-mortem analysis. In the end, two factors drove the bank’s demise.
First, SVB’s customer base was concentrated among venture capital-backed technology companies. Because of that, nearly 90% of deposits topped the FDIC threshold and were thus uninsured.
Second, owing to 2022’s rise in interest rates, SVB’s bond portfolio took a hit. That sparked concern about the bank’s solvency, prompting depositors to overwhelm the bank with withdrawal requests.

Read More

Chasing Yield

James Kerr  |  Mar 31, 2023

THREE YEARS AGO this month, in the middle of the pandemic-driven market meltdown, I went on a dividend-stock buying spree.
I had just turned 60 and was looking to step away from the corporate world in 18 months’ time to take up a second-act career as an author. As part of my retirement plan, I had a sizable money-market account that I planned to live on for a few years before I started taking Social Security and pulling from my retirement accounts.

Read More

Gift of Knowledge

Craig Stephens  |  Mar 30, 2023

MY UNCLE GAVE ME one share of Chevron for my 20th birthday. It was 1995, and he was the stock transfer agent for the company, overseeing its dividend reinvestment plan (DRIP). The share was a modest $48 gift, but the accompanying advice became the foundation of my investing career for the 27 years since.
As a young kid, I would comb through the business section of the Pittsburgh Post-Gazette, monitoring the performance of my dad’s two mutual funds.

Read More

Buffett’s Other Guru

Dan Dawson  |  Mar 27, 2023

PUBLISHED IN 1958, Common Stocks and Uncommon Profits by Philip Fisher was the first investment book to make The New York Times bestseller list.
Never heard of Fisher? Berkshire Hathaway Chairman Warren Buffett points to two key influences on his investment thinking: legendary value investor Benjamin Graham—and growth-stock proponent Phil Fisher. Indeed, I’d argue that Fisher’s words of advice on bonds, dividends and war scares are as relevant now as they were in 1958.

Read More