Category Archives for Blog
The ABCs of Behavioral Biases – Conclusion
We’ll wrap our series, the ABCs of Behavioral Biases, by repeating our initial premise: Your own behavioral biases are often the greatest threat to your financial well-being. We hope we’ve demonstrated
Continue reading...
The ABCs of Behavioral Biases (S–Z)
We’re coming in for a landing on our alphabetic run-down of behavioral biases. Today, we’ll present the final line-up: sunk cost fallacy and tracking error regret. Sunk Cost Fallacy What is it? Sunk
Continue reading...
The ABCs of Behavioral Biases (O–R)
So many financial behavioral biases, so little time! Today, let’s take a few minutes to cover our next batch of biases: overconfidence, pattern recognition, and recency. Overconfidence What is it? No
Continue reading...
The ABCs of Behavioral Biases (H–O)
There are so many investment-impacting behavioral biases, we could probably identify at least one for nearly every letter of the alphabet. Today, we’ll continue with the most significant ones by looking
Continue reading...
ABCs of Behavioral Biases (A–F)
Welcome back to our “ABCs of Behavioral Biases.” Today, we’ll get started by introducing you to four self-inflicted biases that knock a number of investors off-course: anchoring, blind spot, confirmation,
Continue reading...
ABCs of Behavioral Biases – Series Intro
By now, you’ve probably heard the news: Your own behavioral biases are often the greatest threat to your financial well-being. As investors, we leap before we look. We stay when we should go. We cringe
Continue reading...
Ideal Investment Portfolio Management: Principle 10 in Evidence-Based Investing
We wrap our 10-part series on the principles of evidence-based investing with how a fiduciary financial advisor can add value to your investment portfolio management. Most importantly, by combining financial
Continue reading...
Six Hacks for Maintaining Investment Discipline: Principle 9 in Evidence-Based Investing
Investment discipline is all about being able to see past the daily market distractions to maintain a long-term perspective. A big challenge here is knowing how to identify and ignore your own emotional
Continue reading...
Emotional Investing Is Risky Investing: Principle 8 in Evidence-Based Investing
Many people struggle with emotional investing. That is, they find it difficult to make consistent, rational investment decisions, instead of reacting to current market conditions out of fear, excitement,
Continue reading...
Why Stick with a Globally Diversified Portfolio? Principle 7 in Evidence-Based Investing
Why buy and hold a globally diversified portfolio instead of reacting to breaking news? Political, social, and economic headlines come and go. But you never know which market segments will outperform from
Continue reading...
Diversify Your Investment Universe: Principle 6 in Evidence-Based Investing
Holding securities across many market segments, expanding your investment universe, can help manage overall risk. But diversifying within your home market may not be enough. Global diversification can
Continue reading...
What Really Drives Higher Expected Returns? Principle 5 in Evidence-Based Investing
There is a wealth of academic research into what really drives higher expected returns. Simply put, expected returns = current market prices + expected future cash flows. Investors can use this basic equation
Continue reading...
Understanding How Markets Work for You: Principle 4 in Evidence-Based Investing
Attending to how markets work is important for you and your investment portfolio. Should you buy, sell, or hold tight? Before the news tempts you to jump into or flee from breaking trends, it’s critical
Continue reading...
Resist Chasing Past Performance: Principle 3 in Evidence-Based Investing
Some investors select mutual funds based on their past performance. Yet, past returns offer little insight into a fund’s future returns. For example, most funds in the top quartile (25%) of previous
Continue reading...
Trying To Outguess the Market Has No Role: Principle 2 in Evidence-Based Investing
Wouldn’t it be great to hold only top selections in your investment portfolio, with no disappointments to detract from your success? Of course it would. It would also be nice to hold a $100 million winning
Continue reading...
Embrace Market Pricing: Principle 1 in Evidence Based Investing
Market pricing is about you, the market, and the prices you pay. When it comes to investing it helps to know what you’re facing. In this case, that’s “the market.” How do you achieve every investor’s
Continue reading...
Investing in Uncertain Times
After taking a closer look at interest rates and inflation we come to the heart of the matter: When interest rates, inflation, or both are on the rise, what’s an investor to do?
Continue reading...
Has rising inflation got you down?
Inflation is the rate at which money loses its purchasing power over time. As you might guess, there are many ways to measure such a squishy figure. There are various economic sectors, such as energy,
Continue reading...
Fed Takes Center Stage
At its March 15–16 Federal Open Market Committee (FOMC) meeting, the U.S. Federal Reserve raised its federal target funds rate by a quarter-point. It was the first increase since December 2018, but it
Continue reading...
Ukraine
Despite our fervent hopes that Ukraine’s sovereign rights would prevail over tyrannical aggression, it’s now clear that Vladimir Putin has doubled down on the latter.
Continue reading...
Navigating Geopolitical Events
The recent conflict between Russia and Ukraine is an important reminder that geopolitical risk is a part of investing in global markets. Navigating geopolitical events requires expertise and flexibility.
Continue reading...
The Small Caps That May Be Holding Back Your Portfolio’s Returns
The underperformance of small caps in 2021 was driven by poor returns of small growth companies with low profits. These companies have underperformed historically. An approach that excludes small growth
Continue reading...
The Bumpy Road to the Market’s Long-Term Average
Since 1926, the US stock market has rewarded investors with an average annual return of about 10% – the market’s long term average. But it’s important to remember that returns in any given year
Continue reading...
You Want the Size, Value, and Profitability Premiums … But How?
Capturing the size, value, and profitability premiums in real-world portfolios requires expertise. Investors should be cautious about favoring one premium over another or one region over another based
Continue reading...
Fighter Planes and Market Turmoil
Have you been reading the daily headlines—watching markets stall, recover, and dip once again? If so, you may be wondering whether there’s anything you can do to avoid the motion sickness.
Continue reading...
Market Review 2021: A Recovery Amid Challenges
It was a year of uncertainty and anticipation, of hopes for a return to a degree of normalcy following the onset of the COVID-19 pandemic in 2020. And it was a year that showed, again, the difficulty of
Continue reading...
A New Year Conversation
This is no surprise. The world is enormous. To cope with information overload, we engage in what behavioral psychologists refer to as heuristics. These are rules of thumb or mental shortcuts that take
Continue reading...
Evidence-Based Investing in Brief
How do you invest your money over the long term? If you’ve read much of our work, you’ve probably noticed we embrace evidence-based investing. But what does that mean?
Continue reading...
Why a Stock Peak Isn’t a Cliff
Reaching a new high doesn’t mean the market will retreat. Stocks are priced to deliver a positive expected return for investors, so reaching record highs regularly is the outcome one would expect.
Continue reading...
Myth-Busting with Momentum: How to Pursue the Premium
While both simulated and real-world data suggest momentum may not be suitable as a driver of long-term asset allocations, we believe momentum considerations can be integrated in a cost-effective way to
Continue reading...