Recent Articles

You are told that you can invest in one of four boxes, each containing a passively managed portfolio, owning all the stocks in its defined universe. Because markets are efficient, each box has the same expected risk-adjusted return. The boxes are labeled A, B, C and D. To help you decide which box (investment strategy) to choose, […]

We’ve established the unpredictability of the market from year to year, but let’s look at two countries that exemplify this well. Consider the performance of the US and Denmark, shown above. Is it immediately clear which country had the higher return over the past two decades? From First to Worst Denmark, in fact, was the

Across more than 40 countries, there are over 15,000 publicly traded companies.1 If you listen to the news, however, some countries may seem like better places to invest than others based on how their economies and stock markets are doing at the time. Fluctuations in performance from year to year only add to the complexity,

The US stock market has delivered an average annual return of around 10% since 1926. But short-term results may vary, and in any given period stock returns can be positive, negative, or flat. When setting expectations, it’s helpful to know the range of outcomes experienced by investors historically. For example, how often have the stock

The Market’s Resiliency Discipline is an integral element to successful investing. However, even the most stalwart investors can be shaken when a clear crisis has hit. Fortunately, the market has a stronger resolve. The chart above shows performance of a balanced investment strategy following a few historical crises. The subsequent one-, three-, and five-year annualized

After a period of relative calm in the markets, in recent days the increase in volatility in the stock market has resulted in renewed anxiety for many investors. From September 30 to October 10, the US market (as measured by the Russell 3000 Index) fell 4.8%, resulting in many investors wondering what the future holds

The US Value Premium—Year by Year Value stocks have offered an average long-term return premium over growth stocks, which may reflect compensation for bearing higher systematic risk. However, short-term fluctuations in the value premium (relative to growth stocks) can be extreme. The light blue bars in the graph indicate the years in which the US

Although Wall Street and the media encourage us to believe that we can find a ‘free lunch,’ these opportunities are very difficult to exploit. In other word, there are no low-risk/high expected return investments. Here’s why: if an investment offered a disproportionately higher return for the risk involved, word would spread and others would try