Why I Have No Faith in Market Timing
Earlier this week I described the market timing strategy outlined in Mebane Faber’s book The Ivy Portfolio. I chose not to editorialize too much, preferring instead to simply explain the strategy to...
View ArticleWhat Are Normal Stock Market Returns?
How often in the last few years have investors said they’re staying out of the equity markets because of the volatility we’ve experienced recently? Many of them are waiting on the sidelines “until...
View ArticleHow Will Rising Rates Affect Bonds?
Since the 2008–09 financial crisis caused bond yields to plunge to new lows, market forecasters have been predicting a rise in interest rates. And when bond investors think rates will increase, they...
View ArticleClik here to view.
Are We In a Secular Bear Market?
If you’ve spent any time at a cottage this summer, away from the bright city lights, you’ve probably enjoyed some beautiful views of the Milky Way. Astronomers believe that our galaxy is a barred...
View ArticleClik here to view.
The Second Coming of the Perfect Portfolio
The anticipation has been palpable, I know, but the waiting is over. The second edition of The MoneySense Guide to the Perfect Portfolio is now available. The first edition of my handbook for...
View ArticleWhy Market-Beating Strategies Don’t Last
This past spring I asked why everyone isn’t beating the market when countless strategies have been shown to deliver outsized returns—at least in theory. I put it down to self-destructive behaviour, but...
View ArticleProfitability: Entering a New Dimension?
Investors should always be skeptical about new strategies that promise abnormal returns. As I explained in last week’s post, some of those strategies are dubious to begin with, and even legitimate ones...
View ArticleClik here to view.
The Promise of Low Volatility
The relationship between risk and reward is one of the most fundamental in finance: to get higher returns, say the traditional models, you must accept more risk. There’s just one problem with that...
View ArticleUpdated Couch Potato Report Card
Last week I announced the 2012 returns for my model portfolios. Now it’s time to present the updated longer-term returns of the portfolios, with data provided by Justin Bender. This information covers...
View ArticlePlanning to Drive a Monte Carlo
One of the lessons I’ve tried to stress is that investing is not about choosing the right products. ETFs changed the game by giving the little guy sophisticated and low-cost investment tools—no doubt...
View ArticleEstimating Future Stock Returns
What are the long-term expected returns for stocks? That’s a fundamental question every investor needs to consider when deciding on an appropriate asset allocation. Unfortunately, it’s not a question...
View ArticleAre Investors Really This Clueless?
Franklin Templeton recently released its 2013 Global Investor Sentiment Survey, which polled 9,518 people from 19 countries. The survey found that 81% of Canadian investors “expressed optimism about...
View ArticleDoes Dollar-Cost Averaging Work?
Many readers were surprised when I answered a recent Ask the Spud question by suggesting you’re usually better off investing a lump sum rather than using dollar-cost averaging (DCA). DCA is popular...
View ArticleDoes “Smart Beta” Really Beat Cap-Weighting?
“Smart beta” has become a buzzword in investing circles, especially among pension funds and other institutional investors. The term may be new, but the idea isn’t: it’s about looking for ways to...
View ArticleWhy Your Problem Is Not Your Funds
In Monday’s post I looked at “smart beta,” which promises to outperform cap-weighted indexing strategies. I’m frequently asked if I think Couch Potato investors should dump their traditional index...
View ArticleClik here to view.
Seeing Diversification in Action
Why should you add multiple asset classes to your portfolio? That seems like a simple question, but it’s one many investors would answer with only a vague comment about “more diversification.” It’s...
View ArticlePutting the Portfolio Odds in Your Favour
It’s well known that the majority of actively managed mutual funds underperform comparable index funds over any period longer than a few years. In fact, that statement has become so uncontroversial...
View ArticleMore Power in Passive Portfolios
Rick Ferri and Alex Benke recently collaborated on an interesting white paper called A Case for Index Fund Portfolios, which I introduced in my previous post. They compared index portfolios to...
View ArticleClik here to view.
Going on a Factor-Finding Mission
Pick up almost any financial magazine or newspaper and you’ll find full-page ads touting the recent performance of mutual funds and ETFs. What’s the reason for their outperformance? The fund companies...
View ArticleClik here to view.
Looking for Value in Canadian Equity ETFs
Monday’s post about factor analysis was, I admit, too technical for most readers’ tastes. At least that’s the conclusion I drew when the two most enthusiastic comments came from a professor of...
View Article