The Noise in Short-Term Performance

As a parent of identical twins, I’m well versed in the phenomenon of two lookalike entities exhibiting vast dispersion in behavior at any given time. So, when I encounter substantial short-term performance differences between investment strategies in the same asset class, I am disinclined to infer one is better than the other without more information.1...

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CAPE FEAR: Should Investors Be Concerned With Market Valuations?

Investors often look for signals indicating whether it’s a good time to get into or out of the market. Market valuation measures, such as the cyclically adjusted price-to-earnings (CAPE) ratio1 of Campbell and Shiller (1998), are frequently portrayed as indicators to assess whether the stock market’s expected return has increased or decreased. Despite the attention market...

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Myth-Busting with Momentum: How to Pursue the Premium

Nearly 30 years after its formal discovery,1 the appeal of stock price momentum2 remains in the eye of the beholder. Some see its outsize historical premium, 9.1% per year in the US,3 as validation for investing in momentum-focused strategies. Others point to the extreme turnover and occasional catastrophic outcomes4 for the premium as insurmountable hurdles to real-world implementation....

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How TIPS Can Boost Retirement Readiness

The recent surge in inflation shows how the cost of goods and services can increase quickly and unexpectedly. To help plan participants maintain a stable standard of living in retirement, plan sponsors can provide an investment solution designed to accumulate a stream of inflation-protected income using Treasury Inflation-Protected Securities (TIPS). As recent Dimensional research confirms, TIPS are...

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Do ESG Ratings Get High Marks?

The volume of sustainability data is growing fast. Greenhouse gas emissions, for example, are now reported or estimated for almost all public companies. This is great news for investors who want to allocate to companies based on their carbon footprints. Beyond emissions data, the increase in broader company sustainability information can present meaningful challenges. For...

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The Tax Proposal Merry-Go-Round 2.0

On Thursday afternoon (October 28, 2021), The House Rules Committee released a draft of the reconciliation text outlining the framework for what was President Biden’s original $3.5 trillion social safety net proposal. As many of you saw, I released an article on September 14th titled Navigating The Proposed Tax Legislation, in which I outlined The...

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Reading Fed Tea Leaves? Watch Market Prices Instead

Fed watching is once again one of the markets’ favorite pastimes. Fed officials continue to signal that they would favor tapering of bond purchases in 2021, in line with recent announcements from the European Central Bank. When and how remain to be seen. With ample speculation about the Fed, unemployment, and inflation, it might be...

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An Investment to Enhance Your Cash Return Due to Inflation

With interest rates hovering at historic lows levels, it’s been quite a struggle to find a decent interest rate on your cash return. Most of the banks are paying next to nothing, and short-term treasuries are not faring much better. Enter, The I Bond While we recommend that it is good practice that our clients...

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All-Time High Stock Market Anxiety

Investors are often conflicted about record-high stock prices. They are pleased to see their existing equity holdings gain in value but apprehensive that higher prices somehow foreshadow a dramatic downturn in the future. And they may be reluctant to make new purchases since the traditional “buy low, sell high” mantra suggests committing funds to stocks...

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10 Investing Obstacles – and How to Overcome Them

We’ve learned a lot about investing obstacles over the past 60 years, a period that has seen many breakthroughs in the world of finance. What we know comes from studying public markets and is grounded in serious academic research. The lessons are clear: Investing in markets is an excellent plan for meeting long-term goals, like...

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