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Articles of Interest

Diversification For The Long Term

  • December 5th, 2016
  • ETF

The table below, taken from the newly released book I co-authored with Andrew Berkin, “Your Complete Guide to Factor-Based Investing,” shows the annual premium and Sharpe ratio for the equity factors of market beta, size, value, momentum, profitability and quality. It also shows the odds that each premium will produce a negative return over various… Read More

New Book Shines Light On Momentum

  • December 5th, 2016
  • ETF

Momentum is the tendency for assets that have performed well (poorly) in the recent past to continue to perform well (poorly) in the future, at least for a short period of time. This is a big problem for the efficient markets hypothesis, as there’s no coherent risk-based explanation for momentum’s performance. Not only has there… Read More

Bottom-Up Construction Works Best With Multiple Investment Factors

  • November 28th, 2016
  • BSP Author

CAPM was the first formal asset pricing model. Market beta was its sole factor. With the 1992 publication of their paper, “The Cross-Section of Expected Stock Returns,” Eugene Fama and Kenneth French introduced a new-and-improved three-factor model, adding size and value to market beta as factors that not only provided premiums, but helped further explain… Read More

Factor-Based Investing: A Q&A With Larry Swedroe

  • November 28th, 2016
  • BSP Author

Larry Swedroe discusses his new book, “Your Complete Guide To Factor-Based Investing,” as well as the theory behind factor strategies and how investors can achieve their risk and return objectives through them, in a recent Q&A. Find it on MutualFunds.com By clicking on any of the links above, you acknowledge that they are solely for… Read More

The Guide to Happy Giving

  • November 28th, 2016
  • BSP Author

The giving season is underway, with the holidays and year-end bearing down on us. So how can we transform one of the more stressful, and sometimes guilt-ridden, elements of the season into something more life-giving? Whether you’re giving to a family member, a friend or a cause, please consider the following four directives as a… Read More

An Interesting Test of Market Efficiency

  • November 14th, 2016
  • BSP Author

Japan’s Government Pension Investment Fund (GPIF) is the world’s biggest state investor, trumping all other managed government retirement and sovereign wealth funds. Prime Minister Shinzo Abe’s drive to spur the Japanese economy out of its two-decade-and-growing economic slump, known as Abenomics, has pushed the GPIF to plow more money into risky investments, aiming both to… Read More

“Free Lunch” Investing Takes Time to Cook

  • November 14th, 2016
  • BSP Author

As the director of research for The BAM Alliance, I’ve been getting lots of calls recently from investors questioning their international equity investments. This hasn’t been a surprise, as any time an asset class does poorly, a significant number of investors will question why they own that asset. One particular inquiry I received addressed the… Read More

The Truth About Stock Prices

  • November 14th, 2016
  • ETF

In the last few weeks, I’ve unpacked studies addressing both the nominal price illusion and the nominal price premium. So today I’ll answer a related question: Do nominal stock prices really matter? Because the level of a company’s stock price is arbitrary—it can be manipulated, for example, by firms via adjustments in the number of… Read More

What The Stock Market Wants This Election, And What You Should Do In Your Portfolio

  • November 14th, 2016
  • Forbes

We’ll know soon enough who America chooses as its next president, but the market has already voted. Who does the stock market “want” to win? Hillary Clinton. This isn’t a partisan statement, but simply a statement of fact. There may be several indicators to which we could point, but the glaring one is this: When… Read More

Low Priced Stocks No Bargain

  • November 14th, 2016
  • ETF

As I wrote about last week, the absolute level of a firm’s stock price is arbitrary, as it can be easily manipulated by the firm through altering the number of shares outstanding (for example, by splitting the stock). Despite this obvious fact, the research into investor behavior has found a strong preference among individuals for… Read More

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