The stock portfolios I build for my clients consist of thousands of companies around the world. I don’t pick individual stocks, nor do I recommend this to anyone who asks my opinion. But every so often I hear from a client who wants to include individual companies in his portfolio, and I have to explain why this isn’t a good idea. I can understand why people want to do this: choosing individual stocks offers the promise of dramatically outperforming the market. But that’s only half the story. … [Read more...]
The long term investor’s advantage
Equities have a positive expected return, but we often forget that the payout does not come every year, and it does not follow a straight line. That’s why our investment strategy is based on discipline, broad diversification within and across asset classes, and long-term thinking. In November 2011, researchers Andrew Ang and Knut Kjaer published a paper called Investing For the Long Run, which identified several advantages enjoyed by investors with a long horizon. First, they can ignore … [Read more...]
What’s the best way to lower volatility?
There are many kinds of investors, but I’ve never met any who enjoy volatility. Unfortunately, since the early summer the volatility of the stock markets have picked up. This recent bout of volatility is not much different from historical norms, but that doesn’t make it any easier to stomach. We shouldn’t be surprised that investors are looking for ways to lower the volatility of their portfolios—but, of course, they don’t want to sacrifice returns. But isn’t risk and return two sides of the … [Read more...]
The price of safety
Whenever there is high volatility in the stock market, people talk about the “flight to safety.” Since every financial asset has both a seller and a buyer, this whole idea is debatable—for every investor buying the perceived safe havens of gold, government bonds and US dollars, someone else is selling them. What isn’t debatable, however, is that during the last few weeks these safe havens have all performed well, while other “risky assets” like high-yield bonds, stocks and REITs have … [Read more...]
A portal to financial science and investment success
Take advantage of the leading academic minds in finance to create a world-class investment experience for you and your family I believe my role as your advisor is to act as a bridge between the growing body of knowledge about how stock markets work and the ability to implement that knowledge to benefit our clients . . . in other words, to bridge the gap between theory and practice. We work hard to stay on the leading edge of the science of investing so that we can immediately implement any new … [Read more...]
