Small caps are part of the market portfolio and provide important diversification benefits to portfolios of large cap stocks. Small caps are an important component of the total market—investors need a reason to exclude them, not a reason to include them. They tend to behave differently from large caps, thus providing important diversification benefits to portfolios of large cap stocks. Without these diversification benefits, returns of the equity market may not be captured in the most effective way. Read our…
After a period of relative calm in the markets, in recent days the increase in volatility in the stock market has resulted in renewed anxiety for many investors. From February 1-5, the US market (as measured by the Russell 3000 Index) fell almost 6%, resulting in many investors wondering what the future holds and if they should make changes to their portfolios. While it may be difficult to remain calm during a substantial market decline, it is important to remember…
At the beginning of 2017, a common view among money managers and analysts was that the financial markets would not repeat their strong returns from 2016. Many cited the uncertain global economy, political turmoil in the U.S., implementation of Brexit, conflicts in the Middle East, North Korea’s weapons buildup, and other factors. The global equity markets defied their predictions, with major equity indices in the U.S., developed ex-U.S. and emerging markets posting strong returns for the year. Read our 2017…
It’s October, and investors don’t seem overly worried about ghosts in the stock market. But just in case, they are increasingly taking a peek overseas where valuations might be more friendly. In the third quarter, U.S. stocks and stock funds rose once again on the back of solid corporate earnings and hope for a tax overhaul in Washington. It is far from a frenzy—instead, trading has been slow and relatively calm. The average diversified U.S.-stock fund had a total return…
Should stock investors worry about changes in interest rates? Research shows that, like stock prices, changes in interest rates and bond prices are largely unpredictable. It follows that an investment strategy based upon attempting to exploit these sorts of changes isn’t likely to be a fruitful endeavor. Despite the unpredictable nature of interest rate changes, investors may still be curious about what might happen to stocks if interest rates go up. Read our 2017 2Q Newsletter
Ever ridden in a car with worn-out shock absorbers? Every bump is jarring, every corner stomach-churning, and every red light an excuse to assume the brace position. Owning an undiversified portfolio can trigger similar reactions. Read our 2017 1Q Newsletter
In 2016, the US market reached new highs and stocks in a majority of developed and emerging market countries delivered positive returns. The year began with anxiety over China’s stock market and economy, falling oil prices, a potential US recession, and negative interest rates in Japan. US equity markets were in steep decline and had the worst start of any year on record. The markets began improving in mid-February through midyear. Investors also faced uncertainty from the Brexit vote in…
Cash balance plans should be considered by business owners who are seeking ways to maximize retirement plan contributions while maximizing tax benefits to their business. These plans can be paired with 401(k) defined contribution plans to increase retirement savings and tax deferral opportunities.
After all that, U.S.-stock funds are ahead for the year so far. It has been a bumpy ride, from China to oil to the most-recent bump, Brexit. But U.S. stocks, and funds, keep recovering, clinging to modest gains. The average diversified U.S.-stock mutual fund was up 1.8% for the second quarter, and 1.5% for the year so far, according to data from Thomson Reuters. Corp.’s Lipper unit… Read our Second Quarter Newsletter for 2016.
Everyone likes the top 10 lists, made popular by David Letterman, and this one from DFA we like as a great overall look at what it takes to have a successful investment experience. We’ll make some practical comments on each: 1—With nearly 100 million trades daily, stocks are priced efficiently and the likelihood that a manager is giving any “secret research” for 1% extra is highly unlikely. We also hear “why is everyone buying Apple stock.” It’s just not the…
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