Can You Time Risk Premiums?

No one really likes risk. We all can deal with it, but that doesn’t mean we want to. Yes, there are people who live to jump out of airplanes and walk on tight ropes with no net, but I’m talking about financial risk. Unfortunately, at least in investing, risk and return are tightly intertwined. If…

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What Can We Learn from the Market Disasters of the 1970s?

Throughout history, when bad news and events touched the daily lives of investors and caused nest eggs to shrink, it’s been natural to ask, “Is this the end of investing as we know it? Have new developments changed things so much that the old patterns no longer apply?” These four stories should help illustrate an…

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The Hidden High Costs of Index Funds

Here we cover the basics of index funds. Today, many investors use index funds because they provide an easy way to gain cheap, diversified exposure to specific areas of the market. The question is this: Is an index a precise representation of the sector of the market it describes?

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Consistently Successful Active Managers Are 'Rarer Than Rare'

The following excerpt is from our ebook “12 Principles of Intelligent Investors,” which you can download here. Want to get better at investing? Are you looking for simple, approachable ways to deepen your knowledge of the keys that create financial success? Using academic research and expert advice, this resource offers 12 principles for building wise,…

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Disciplined Investors Don’t Rely on Market Predictions

Authors Note: This article was originally published towards the end of January 2016. To put it mildly, the year got off to a rocky start, and a lot of people were incredibly nervous about what this meant for the markets. While this article specifically addressed the situation at the beginning of 2016, but with a…

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Can You Time the Market?

Can You Time the Market

Over the long term, market returns need to be captured efficiently and consistently. Trying to guess when they occur is an impossibility that leads to the underperformance stated above. How difficult is it to time the market? Let’s look.

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Prophets & Losses: Predicting the Market is a Losing Proposition

WHAT IS OCCAM’S RAZOR? Occam’s Razor is a principle attributed to William Occam, a 14th century philosopher. He stressed that explanations must not be multiplied beyond what is necessary. Thus, Occam’s Razor is a term used to “shave off” or dismiss superfluous explanations for a given event. This concept is largely ignored within the investment…

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Can Indexing Become Too Big?

This is an issue that comes up as a last ditch effort to attempt to sway the active/passive argument in the active direction. It’s as if after a wave of articles that show the shortcomings of trying to outguess the markets an editor stands up and announces to the staff: “Folks, we need something ominous…

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