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Does ESG Investing Reduce your Expected Returns?
Many investors today are increasingly looking at more than just risk and return in their portfolios – they are also hoping to make a positive “impact” with their investment dollars. This has led to an explosion in popularity in what is now the fastest growing category of investment style today: Environmental, Socially-responsible (or Sustainable) and […]
Here’s a Little T.I.P. for You
Everything, they say, has its price. Well perhaps not family, love or friendship but certainly most things do! And it turns out that even money itself has a price – and we refer to that price as the “interest rate.” Interest rates gauge the level of our “interest” in obtaining (or lending) money. When money […]
Welcome Back Volatility, Our Old Friend
Well that was exciting! Until this month’s ~10% “correction” in world equity markets, volatility had fallen so far below historical averages that stock market movements had almost begun to resemble the relative tranquility of fixed income markets. For months on end, equity returns were generally positive and steady – in fact, the S&P 500 did […]
Do Bonds Make Sense in a Rising Rate Environment*?
You may have noticed that interest rates around the world have generally moved higher over the last few months. Predictably, this has encouraged certain investment “gurus” to issue increasingly vocal warnings to fixed income investors to “sell now!” or face heavy losses. A “bond bear market” is right around the corner they say! Is there […]
What is the Difference Between Gambling and Investing?
Most investors instinctively know that investing and gambling are not the same thing. At the same time, they may find it difficult to articulate exactly why they are different. They are both often considered in a similar context — in fact, when asked to describe their personal investment strategy, investors sometimes resort to using gambling […]
What About Warren Buffett?
As evidence-based investors, we know that in aggregate, the relative performance record for active mutual fund managers is dismal. Depending on the asset class in question, roughly 80%-90% of active equity managers have underperformed their benchmark index in any given 10-year period, and these poor results are actually worsening over time. The amount of the […]
Charts that Humble
“It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so.” -Mark Twain At Vickery Financial, we know that successful investing is not easy. It requires, among other things, a disciplined plan, a consistent and well-reasoned investment philosophy and a long-term view. But even with […]
How to Win by Not Losing
At Vickery Financial, we know that everyone wants a successful investment experience. Unfortunately, there are several obstacles in our way toward achieving that goal. Some of these obstacles are simply ‘frictions’ or costs that can be reduced but not entirely eliminated. These would include investment management fees, mutual fund expenses, trading costs and of course, […]
Why does the Federal Reserve want Inflation?
Investing, as we all know, involves risk. In fact, there are several – to name just a few, there is market risk, interest rate risk, currency risk, default risk, political risk, economic risk, and even natural disaster risk. Now if you want to avoid most of these risks, you can always keep all of your […]
What do we mean by “the market”?
If you happen to tune into the financial media (and we don’t recommend it!), you will undoubtedly hear frequent references to “the market”. The reporters and commentators will discuss not only what “the market” did, but also how it looks to them, and even how it feels, as in “the market looks strong”, “the market […]
Corrections are Part of the Plan
If the US stock market made a noise it would sound like crickets right now. As I write this piece in early May, the S&P 500 index has not moved up or down by more than 0.2% for the last nine trading days in a row. The last time the market experienced such a long […]
The Case of the Missing Stocks
Here’s a pop quiz for you: How many stocks are in the Standard & Poor’s 500 Index? Hint: There’s a big clue in the name of the index. If you answered “500”, you’re correct! That was too easy, right? OK, here’s another one: How many stocks are in the Wilshire 5000 Index? The answer is […]
The Underperformance of Active Managers Should Surprise No One
I’d like to start this month’s commentary with a moment of silence for the actively managed investment industry. Net client cash flows have been negative since 2004 for actively managed mutual funds, and the latest Morningstar data offers no relief on that front. Investors withdrew $340 billion from actively managed funds and deposited more than […]
What is Evidence-based Investing?
At Vickery Financial, we throw the phrase “evidence-based investing” (or “EBI” for short) around fairly casually, without spending much time to actually define it. This month, I’d like to explain to our readers outside of the finance industry exactly what we mean by EBI and why we believe it offers the best path for a […]
The Essence of Finance
On the first day of my very first Investments course in college, our professor stated that he wished to take us all to the tattoo parlor down the street and have two phrases permanently inked on our arms. On one arm, he would write “Time Value of Money”; the other arm would read “Risk and […]
Does Diversification Still Work?
I have a good friend who, despite my advice, invests virtually all of his portfolio in an S&P 500 index fund. No foreign stocks, no real estate, no emerging markets, no bonds. Lately, there’s no denying that the US has been the place to be, and just looking at his recent performance, you can almost […]
Will the Election Have Consequences for Your Portfolio?
After an incredibly long, emotionally-charged campaign, the 2016 election is finally over. The GOP has swept and will control the White House and both Houses of Congress for at least the next two years. Investors are understandably curious, and perhaps a bit nervous, about what the results may mean for the economy, markets and their […]
Why Invest in a Bond Mutual Fund?
One of the more frequent questions we hear pertains to investing in fixed income mutual funds vs. buying individual bonds. The question usually takes the form of something like “Why invest in a bond fund when you can buy individual bond(s), collect the coupons, and hold until maturity?” The underlying assumption in the question is, […]
Musings on the Productivity Puzzle
First, the good news – the world is wealthier today than it has ever been. Total global wealth now clocks in at around $250 trillion, or almost $34,000 for every man, woman and child on earth. World GDP per capita, a measure of annual global income, is also at all-time highs – more than $16,000 […]
Why are Interest Rates so Low?
As you may have noticed, interest rates are very low at the moment. In fact, they may be the lowest they have ever been. As I write this piece in the middle of August, some $13.4 trillion in global government debt actually trades at negative yields, representing an astonishing 1/3 of all sovereign debt outstanding. […]
The Risk in Self-Directed IRAs
Did you know that it’s possible to “kill” your own IRA? Now by “kill” I am referring to losing the tax qualified status of your retirement account by engaging in either a prohibited transaction, or making a prohibited investment. This risk typically only arises within a “Self-Directed” IRA (SDIRA), where an investor eschews the traditional […]
An Intro to Donor-Advised Funds
Do you ever find yourself enamored with the idea of running your own private family office, but lack the $100 million or so it takes to make it economically feasible? Are you charitably inclined and wish to establish a permanent legacy of giving for yourself (and perhaps your children)? Then I have some good news […]
The Case for High-Quality Bonds
As long-term, evidence-based investors, we know that our portfolios should be diversified. And if we wrinkle our foreheads a little and think about it for a minute, we may even be able to list some of the important benefits of having a well-diversified portfolio: First and foremost, a diversified portfolio reduces risk by owning multiple, […]
What is the Fiduciary Standard?
When you think about it, there are plenty of good reasons why pharmaceutical sales representatives are not allowed to sell drugs directly to patients. Besides the obvious lack of medical training necessary to prescribe them safely, these representatives would clearly be subject to a significant conflict of interest with their own customers. The conflict would […]
