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Investors Respond to Feedback

Feedback on investment decisions helps improve investor performance: Larry Swedroe unpacks the research. It’s been well documented that, on average, retail investors are “dumb” money. For example, on average, the stocks they buy go on to underperform, and the stocks they sell go on to outperform. Sadly, investors even manage to underperform the very mutual…

Turns Out the “Smart Money” Isn’t

Turns out the “smart money” often isn’t. Larry Swedroe on who, exactly, exploits market anomalies. Institutional investors are generally considered “smart money” that exploits the behavioral biases of “dumb” retail money. However, there have been some holes poked in that idea recently. For instance, Roger Edelen, Ozgur Ince and Gregory Kadlec, authors of the study…

‘Sure Things’ to Watch for in 2017

Larry Swedroe compiles his list of financial predictions to watch for the year. Every year, I like to keep track of the predictions “gurus” and other market observers make for the upcoming year, specifically the ones they say are “sure things.” It seems like no one in the financial media holds them accountable (which is…

“A State of Heart” Featuring Tim Maurer

For some, fiduciary is just a headline. For us, “It’s who we are.” The word fiduciary has been in the news a lot of late, from Wall Street to Washington, but it’s a word that has always been part of our daily dialogue. Advisors who act as fiduciaries, as we do, are legally required to put the…

The Impact of Scale on the Performance of Active Managers

Diseconomies of scale and their impact on active manager performance. There is a large body of overwhelming evidence that past performance is at best a poor predictor of active managers’ future performance. That is why the SEC requires that common and familiar disclaimer. There are many explanations for the difficulty that active managers face in…

Another Angle On Factor Diversification

ETF

Last week, we examined the data (from my new book, “Your Complete Guide to Factor-Based Investing,” which I co-authored with Andrew Berkin) on the odds that the premiums associated with some common investment factors would produce a negative return over various horizons. We then examined how constructing a diversified factor portfolio might impact those odds…

Election Revives Old Myths

ETF

The results of the U.S. presidential election not only surprised almost all the gurus who were saying that a Hillary Clinton victory was a sure thing, but also those forecasting that, if by some miracle Donald Trump won, a stock market crash was bound to occur. Prior to the election, I had received many inquiries…

The Perils Of Bargain Hunting

ETF

As I have been discussing in a series of articles (which you can find here, here and here), we now have a substantial body of evidence demonstrating that individual investors possess a preference for low-priced equities. This is anomalous behavior, because the level of a company’s stock price is arbitrary—firms can manipulate it by adjusting…

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