Monthly Archives: March 2014

“Rigged” Markets

Michael Lewis has been making the press rounds pitching his new book Flash Boys, a narrative centered around the advent of high frequency trading (HFT). I’m sure it will be an excellent book (I have it on order) as Lewis is a great writer. I don’t however, have a ton of respect for how he is […]

Posted in fees, investing, markets | Comments closed

No, Asset-Based Fees Don’t Make Any Sense

Yesterday I came across a piece in ThinkAdvisor titled “Why AUM Fees Still Make (Im)Perfect Sense” which you are welcome to go ahead and read. Bob Clark, the author, makes a great point that I have also made: AUM (assets under management) fees are measurably better than commission-based pay for financial professionals. AUM fees have […]

Posted in fees, investing | Leave a comment

Hiding Behind Individual Bonds

I continue to come across talking heads, advisors and brokers claiming that it is best for their clients to own a small portfolio of individual bonds rather than a bond mutual fund or ETF. Usually this is centered around some nonsense about being better protected against rising interest rates. I’ve already addressed that fallacy so I won’t […]

Posted in investing, markets | Comments closed

Highlights from the 2013 S&P Scorecard

Standard & Poors just released their semi-annual review of actively managed mutual funds, taking a statistical look at how many managers are beating their respective benchmarks across multiple asset classes.  The data show what we already know: most active managers under-performed over the last one, three and five years.  Take a look at the far […]

Posted in investing | Comments closed

The Costs of Reaching for Yield

Late into economic recoveries we see a typical pattern emerging. Central banks have lowered rates to encourage economic recovery. Asset markets have recovered, leaving investors feeling more confident about investment risks. Investors, dissatisfied with falling yields, start to look for more income.  In their search, they begin to ramp up the risk of their fixed […]

Posted in investing | Comments closed

Continued Bad Behavior

Morningstar has new data out from their Investor Returns research.  In these studies, Morningstar uses the cash flow data on when investors buy and sell mutual funds to determine how well (or poorly) investors time these transactions.  This shows us if investors successfully buy high and sell low and if they successfully participate in the […]

Posted in behavioral finance, fees, investing | Comments closed

The Wall Street Journal on Investment Advisory Fees

Pretty cool moment for me this weekend as I was quoted in the Wall Street Journal in Jason Zweig’s “The Intelligent Investor” column.  You can find the piece here: Incredible Shrinking Management Fee I’m happy to see that people are starting to ask more questions about the nature and structure of professional financial advisory fees. […]

Posted in fees, investing | Comments closed

The Luckiest Investors in History

We live in an amazing period. Imagine that 60 years ago you were a stock investor.  Maybe you would grab the morning paper and see yesterday’s closing prices for the biggest 100 stocks on the NYSE. You’d circle a few (hey, GM is down 5/8!) and take the paper with you to call your broker […]

Posted in behavioral finance, fees, investing, markets | Leave a comment

The Worst Investment You’ll Ever Make

It comes packaged in a 3-inch thick offering memorandum or prospectus.  It lands with a thud on the table, the heft of the document sure to impress you as a potential investor. Maybe it was your golf buddy or your brother-in-law.  Maybe it was even your CPA or your broker.  Whoever it came from, the […]

Posted in fees, investing | Comments closed