Outcomes and Probabilities

German, Brazilian, English, Argentine, and Spanish football fans, take heart.  Football (or in American vernacular - soccer) is quantifiably the least predictable major sport.  In no other sport is luck such a critical determinant of the outcome.  So you have that going for you the next time you sit down with a Frenchman to discuss [...]

Why You Should Not Own Your Best Investment Idea in a Tax-Deferred IRA

The following paraphrases a conversation that I have had many times before with friends and clients.  It is obviously never the same dialogue but the underlying advice is the same - that you should generally not own your favorite investment or can't-miss stock idea in a traditional IRA.   Me: Did you buy this stock because [...]

A Story of Correlation and The Greatest Team Ever Assembled

A respected portfolio manager presented recently at an investment symposium where she explained an investment strategy that has consistently maintained zero correlation to stocks.  Several times during her presentation, she described why the strategy should be expected to maintain a near-zero correlation to stock markets in the future.  During the break that followed, financial advisors [...]

The Stock Market Sits Down for a Job Review

"Describe your perfect day." Such a simple interview directive rarely fails to provide the most telling of replies.  Responses are almost never scripted in advance and usually provide productive insight into what motivates the interviewee, what passions she has, her creativity, or how she organizes her day.  Responses from previous experience posing this question (even [...]

4 Things You’ll Wish You Did Before the Bull Market Becomes a Bear Market

"We all must suffer one of two things: the pain of discipline or the pain of regret." Entrepreneur Jim Rohn was not specifically describing the practice of investing with this quote but it fits perfectly.  The harsh reality of investing is that there will be good times and there will be bad times.  Getting greedy [...]

Scrabble, Monkeys, and a Better Way of Passive Investing

Oxyphenbutazone is a non-steroidal, anti-inflammatory drug used mostly in eye-drops that was pulled from markets worldwide in the mid-1980’s for its link to bone marrow depression.  More interestingly, but perhaps just as trivial, Oxyphenbutazone represents the highest possible scoring play in Scrabble.  Play it across three triple word score squares and eight already-played, perfectly positioned [...]

Dividends May Lie…And So Might the Marketing Pitch of Dividend Investing

Few things in our profession are more frustrating than when financial advisors deliver bad financial advice.  It doesn’t have to be that bad financial advice is dishonest or delivered for the wrong reasons (like it is so often, for the benefit of the advice-provider).  It is just that misguided or blatantly wrong financial advice hurts consumers and [...]

Q1 2017 Investment Commentary Part II: Forecasting the Future

Let’s start with a debatable, but widely held fundamental concept of investing: the best predictor of future returns for stocks is the current valuation.  This is generally true of a single stock, a sector, or an entire country’s stock market.  Academics and practitioners debate whether important factors like gross profitability, price momentum, earnings momentum, yield, [...]

Stocks at an All-Time High

“Congratulations.  I always thought that record would stand until it was broken.”  -Yogi Berra in a telegram to Johnny Bench after Bench broke Berra's record for most home runs as a catcher.   We recently explained why the Dow Jones Industrial Average is a terrible, no good, very bad index.  In spite of our best [...]

Q4 2016 Investment Commentary: Planning vs. Prognosticating

Last Friday here in Atlanta, local businesses closed, restaurants shut their doors by late afternoon, school activities were cancelled, and the Atlanta metro region went under a State of Emergency in anticipation of a debilitating storm.  Meteorologists unanimously predicted 2-5 inches of snowfall later that evening – an obviously dire amount of snowfall by southern [...]