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Post-WWII U.S. Stock Returns and the Triumph of Optimism

Investors in U.S. equities have been well-rewarded in the post WWII era. For example, over the 70 calendar years from 1949 through 2018, the S&P 500 Index returned 11.24%. And with inflation rising 3.41%, it provided a real return of 7.83%. Should investors extrapolate that return going forward? Before doing so, you should consider how the 11.24% return was achieved. Among the questions that s...

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The Trouble with Convenience

Young professionals beginning to accumulate wealth have grown up alongside some stunning advances in personal technology. Many such emerging investors were among the first generation for which computers in the classroom became a fixture, and they remember dialup internet. They came of age as cellphones evolved to boast more computing power than the equipment on the spaceship that allowed humans to...

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The Toll of New Trade Tensions and Your Portfolio

It was hard to miss the headlines about escalating trade tensions between the U.S. and China this week—and hard not to notice the up-and-down market activity that went along with it. But what, if any, long-term impact does trade policy have on the economy and, by extension, our portfolios? The BAM ALLIANCE’S Director of Investment Strategy Kevin Grogan explores this topic in the following ...

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Climate Change Investing Research

The 2015 Paris Agreement recognized finance as an important element to successfully transition to a low carbon economy. Policymakers hoped to achieve this objective, to a large extent, by mandating an increase in the level of climate-relevant information available to investors. For instance, the European Commission’s “action plan on sustainable finance,” adopted in March 2018, proposed the ...

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Stock Volatility and Trade Tensions

Remember, volatility is a natural feature of the market, not a flaw. Tim Maurer appears on Nightly Business Report to discuss steps investors should, and shouldn’t, consider taking in response to stock market turbulence amid trade tensions. This commentary originally appeared May 7 on NBRbizrpt’s YoutTube channel By clicking on any of the links above, you acknowledge that they are sol...

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Active Management’s Impact on Returns and Volatility

A vast body of research provides powerful evidence of the failure of active management to generate persistent alpha (risk-adjusted outperformance). For example, since 2002, S&P Dow Jones Indices has published its S&P Indices Versus Active (SPIVA) Scorecard, which compares the performance of actively managed equity mutual funds to their appropriate index benchmarks. The evidence contained...

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‘Passive’ Market Efficiency Works

Over the past few decades, there has been a substantial shift from active to passive investment strategies. Active strategies give managers discretion to select individual securities and/or time the market, generally with the investment objective of outperforming a previously identified benchmark. Passive strategies (such as indexing) use rules-based investing to track an index, typically by holdi...

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Does Money Buy Happiness?

There’s a cliché that money can’t buy happiness. Is that true? Thanks to research from Nobel Prize-winning economist Daniel Kahneman and Angus Deaton, authors of the 2010 study “High Income Improves Evaluation of Life But Not Emotional Well-Being,” we can answer the question: It does—to a point. Kahneman and Deaton found that happiness tends to increase along with income up to about $75...

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R.I.P. Book Value?

If you’re familiar with factor investing, you’re likely aware that value investing, particularly in the U.S. market, has had a challenging stretch over the last 10 years. If you dig deeper into the darker recesses of factor investing nerdery, you’ll also find that the validity of book value — one of the traditional measures of quantitative value — as a measure of a company’s intrinsic ...

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Index Investing’s Market Impact

Over the past few decades, there has been a substantial shift from active to passive investment strategies. The shift has occurred as investors have become more aware of the persistent failure of active management, as demonstrated in the S&P Dow Jones biannual Indices Versus Active (SPIVA) reports. A January 2019 Federal Reserve Bank of Boston study, “The Shift from Active to Passive Investi...

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Be More Purposeful With Seinfeld’s Productivity Hack

My work as a financial advisor is dedicated to helping others best allocate their scarce resources in a way that is optimally aligned with their goals and grounded in their values. And while most of that work involves financial resources, I’ve also become somewhat obsessed with the stewardship of what is perhaps our scarcest resource—time. One of the simplest and best productivity “hacks” ...

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Revisiting the Benefits of International Diversification

Ever since the Great Financial Crisis of 2007-2008, when the correlation of all risky assets rose toward 1, investors have been hearing that because of globalization, the world has become flat and the benefits of diversification are gone. The explanation is generally that the world market has become more integrated and financial markets more globalized. This has led some investors to draw the wron...

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The Risk Warrior

Janet Levaux, editor-in-chief with Investment Advisor, sits down with Larry Swedroe to get his latest thinking on asset allocation and portfolio diversification. Find it on InvestmentAdvisorDigital.com By clicking on any of the links above, you acknowledge that they are solely for your convenience, and do not necessarily imply any affiliations, sponsorships, endorsements or representations whatsoe...

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Preparing Yourself for the ‘Retirement Apocalypse’

Is there a ‘Retirement Apocalypse’ approaching? Larry Swedroe talks with Scarlet Fu on Bloomberg TV about the four issues investors nearing retirement are facing and the argument for passive vs. active management. Find it on Bloomberg.com By clicking on any of the links above, you acknowledge that they are solely for your convenience, and do not necessarily imply any affiliations, spon...

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Evidence-Based Investing Captures What Traditional Indexing Leaves Behind

Prior to joining Buckingham Strategic Wealth, I worked with institutional clients educating them and supporting their use of indexes within their global equity portfolios. At the time, I was working with MSCI – the index giant – out of their Chicago and San Francisco offices. My clients included some of the largest public pensions in the world. My meetings usually included one of two discussio...

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Planning a Successful and Meaningful Life in Retirement

While about 10,000 Americans retire daily, most people seem to spend less time planning for retirement than they do for vacation. According to a 2016 survey by GoBankingRates, the result is that 55% of Americans have less than $10,000 saved for retirement. And a 2017 study, “Do Households Have a Good Sense of Their Retirement Preparedness?” by the Center for Retirement Research at Boston Co...

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2018’s Active Vs. Index Scorecard

Since 2002, S&P Dow Jones Indices has published its S&P Indices Versus Active (SPIVA) Scorecard, which compares the performance of actively managed equity mutual funds to their appropriate index benchmarks. Most Recent Data The 2018 report includes 15 years of data. Following are some of its highlights: In 2018, 69% of all domestic funds underperformed the S&P Composite 1500 (in a d...

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Tale Of 2 Stock Markets

The fourth quarter of 2018 was a pretty miserable one for investors, with the S&P 500 Index losing 13.5%. And it was looking a lot worse on Christmas, although the index rallied 6.8% in the last week of the year. So how were investors thinking about the market in January? The answer depended on whether you were a Republican or a Democrat! The Spectrem Group, which conducts ongoing primary rese...

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Financial Advisors: Are You An Explainer, Elucidator Or Enchanter?

Not all financial planning—or financial planners—are equal. The Certified Financial Planner Board has done much to standardize a substantive base level of knowledge for aspiring advisors. But the value of knowledge is vastly diminished without the ability to inspire understanding. This is where organizations like the National Association of Personal Financial Advisors (NAPFA) and the Financ...

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Four Critical Elements of a Sound Investment Strategy

Investors should focus on fees, global diversification, tilting toward small and value stocks, along with a focus on high credit quality and safe fixed income. Kevin Grogan shares these tips with Robert Powell on The Street’s Retirement Daily Podcast to help make up the elements of a sound investment strategy. Find it on TheStreet.com By clicking on any of the links above, you acknowledge th...