Recent Articles

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

Safety In Numbers When investing, people too often try to seek out the highest number with very little though of the consequences. Whatever has the highest return must be the best investment. However, a crucial rule of investing is high returns always come with higher volatility. Large increases in value are often followed with large

Safety In Numbers As we’ve been discussing, diversification is a necessary element to any portfolio. Investing across several uncorrelated asset classes benefits a portfolio’s overall return. However, diversification does not stop there. Smarter investors think globally. This table shows the annual performance in US dollar terms of 21 developed-country stock markets for the past 14

The Investing Challenge Because asset classes around the world do not behave consistently or predictably, combining them in diversified balanced strategies can eliminate much of this randomness. The chart features the annual performance of major asset classes in the US, international, and emerging markets over a 48-year period. In both US and non-US markets, there

Capital Markets Work Most look to the financial markets as their main investment avenue—and the good news is that the capital markets have rewarded long-term investors. The markets represent capitalism at work in the economy—and historically, free markets have provided a long-term return that has offset inflation. This is documented in the growth of wealth

The Search For Stock Fund Winners The size of the mutual fund landscape masks the fact that many funds disappear each year, often as a result of poor investment performance. Investors may be surprised by how many mutual funds become obsolete over time. Funds tend to disappear quietly, and underperforming funds—especially those that do not