Chasing Performance

It’s human nature to believe that we can get an edge on someone else.  We haggle with the car seller to get a “steal of a deal.”  We spend hours figuring out our fantasy football rosters-who to draft, who to play, in hopes of winning our league.  Nowhere is this tendency more prevalent than in our investing behavior.

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Latest Real Investing Research

In our last piece in this series, “The Weight of Evidence,” we introduced three key stock market factors (equity, value and small-cap) plus a couple more for bonds (term and credit) that have formed a backbone for evidence-based portfolio construction. Continued inquiry has found additional market factors at play, with additional potential premiums.

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Fund of Funds of Fees

Since higher fees have been shown to be detrimental to shareholders’ returns, you would think that an executive of an expensive fund would be reticent to talk with someone who tells his publicist “I plan to ask some tough questions about the funds’ portfolio and expense ratios and whether or not these meet the firm's fiduciary responsibilities to its clients.”

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Are There Good Fees?

You’ve probably heard us whistle this tune so often that you can sing along yourself: Among the best ways to maximize expected returns is to minimize the costs involved in achieving them.  This begs the question: What about those fees you pay to folks like us?

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Avoiding Money Traps

According to Warren Buffett: “You don’t need to be an expert in order to achieve satisfactory investment returns.  But if you aren’t, you must recognize your limitations and follow a course certain to work reasonably well.  Keep things simple and don’t swing for the fences.  When promised quick profits, respond with a quick “no””.

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Fiduciary Follies

The battle over requiring all financial advisors to act as fiduciaries rages on with both the Department of Labor and the SEC considering fiduciary rules. Probably the biggest reason that nothing has actually happened since the Dodd-Frank mandated considering of a universal fiduciary standard in 2010 is the aggressive resistance of the brokerage and insurance industries.

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