How Should an Overvalued Market Affect Your Investment Plan?
Markets don’t move capriciously. They move because something new has happened – new information has arisen. The tricky part is that we don’t know what new information will arise.
A Vanishing Value Premium?
Value stocks underperformed growth stocks by a material margin in the US last year. However, the magnitude and duration of the recent negative value premium are not unprecedented.
Evidence-Based Investing: Which Financial Theories Have Borne the Most Fruit Over Time?
You’ve probably heard the term evidence-based investing. In fact, you may have even read about it here. But do you know where the term comes from? Obviously, the key word is evidence, referring especially to the kind that has been peer-reviewed and time-tested. But it begs the question: Which evidence has borne the most fruit […]
Total Return vs Income Investing: Same, but Different
Retirees can take 2 main approaches to spending from portfolios. 1) Focus on income and dividends produced in the portfolio, a.k.a. “income investing.” 2) Sell assets as appropriate to meet spending needs. For your portfolio, they’re basically the same thing. But, from your point of view, you should be aware of one difference: focusing on income investing can make your portfolio less diversified.
Is a High CAPE Cause for Alarm? Part 2: Valuation-Based Asset Allocation
Discussion around PE10 focuses primarily on how to adjust expectations about future stock market returns based on its value. A more controversial topic is whether it is beneficial to adjust strategic asset allocation in response to where PE10 is currently situated.
Bucket of Cold Water Dumped on this Investing Strategy
Poor Greece. Not even the Greek alphabet has been given safe quarter these past weeks. Perhaps it is the ever increasing popularity of ETF strategies and the continuing underwhelming performance of active managers, but one thing is clear if you are trying to sell an investment product: it is best to couch it as an […]
How to View Social Security vs. a Long-Term Stock Portfolio
MarketWatch columnist and colleague Robert Powell recently shared an intriguing question with me from one of his readers on the merits of the Social Security retirement payout versus the returns on a conservative, long-term stock portfolio.
Why the Dow Doesn’t Work
With Apple’s addition to the Dow (or more properly, the Dow Jones Industrial Average), now is a great opportunity to look at how to think about the Dow, and indices more broadly. Indices are great tools for understanding what is going on in the markets, but you need to understand what to do with those […]
Are market valuations the most important factor for retirement income strategies?
The question remains as to whether historical withdrawal rates provide sufficient insight about what can reasonably be expected to work for more recent retirees.
