Client Vault

Resources

A Culture That Encourages Misconduct?

Huffington Post

When I started writing books about a decade ago, I took the position that no one should rely on a broker for financial advice. My reasoning was simple. I had never met a broker who recommended a globally diversified portfolio consisting solely of low-management-fee index funds, exchange-traded funds or passively managed funds. It was my…

Mispricing Underlies Profitability Premium

ETF

It has been well-documented that profitability is positively correlated with stock returns—firms with higher profits earn higher returns. The question that we will ask today about the profitability premium relates to its source: Is it based on risk? Or, is it an anomaly that results from persistent pricing errors? F.Y. Eric Lam, Shujing Wang and…

How Our Fears About Money Could Swing the 2016 Election

New York Times

I’m getting more questions about what this election will mean for people’s personal financial situations than I’ve received in any previous election that I can remember. Financial advisers almost twice my age tell me the same thing. While I’m sure there are many reasons for these questions, I submit that the primary one is this:…

The Dual Roles of Money

New York Times

Money is an interesting actor that plays two roles in our lives. In the first, money equals money. It fits in a spreadsheet. It’s something to be calculated. In the other, money equals stories. It’s what we tell ourselves about our relationship with money. Let me share a story I’ve told myself. For six years,…

Politics Can Sway Investing

It seems that in the upcoming presidential election, American voters will be faced with choosing between two candidates with the highest unfavorable ratings in history. It’s either that (at least if the parties’ national conventions go as expected), or a choice not to vote. The unfavorable ratings of both candidates are creating a great amount…

A New Four-Factor Investing Model

For about three decades, the working asset pricing model was the capital asset pricing model (CAPM), with beta—specifically market beta—being its sole factor. Then, in 1993, the Fama-French three-factor model—which added size and value—replaced the CAPM as the workhorse model. By eliminating two major anomalies (the outperformance of small stocks and of value stocks), it…

All Fiduciaries Aren’t Created Equal

Robo-advisors have had a significant — and generally positive — impact on the financial services industry. The term typically refers to services that use models and algorithms to invest client portfolios, often in exchange-traded funds (ETFs). A benefit much touted by some of these services is that there’s no interaction with a human advisor. The…

The Paranoid Survive, but They Burn Out. Take a Break.

Perhaps you’ve heard the expression, “Only the paranoid survive.” Ring a bell? If so, it’s probably because that’s the title of a book by Andrew S.Grove, the former chairman and chief executive of Intel. When I read this book in late 1999, I bought into the need to always be looking for opportunities and to live my life…

Buffett’s Advice Widely Respected, Seldom Followed

ETF

If investors were asked, “Who do you think is the greatest investor of our generation?” I’d bet an overwhelming majority would answer, “Warren Buffett.” If they were then asked, “Do you think you should follow his advice?” you might think that they would say, “Yes!” The sad truth is that while Buffett is widely admired,…

Retirement Is Scary; Plan It Out

ETF

Retirement creates many challenges. Unfortunately, while about 10,000 Americans retire daily, the sad truth is that most people seem to spend less time planning for retirement than they do for a vacation. Anxiety regarding our futures is a common ailment, especially among the millions of Americans rapidly approaching the end of their working years. And…

Beware The Drag Of Collar Strategies

ETF

It’s been well-documented that, in general, investors are risk-averse. This aversion to losses leads many investors to seek “tail protection” strategies. And the most direct way to obtain downside protection is to buy put options. However, purchasing volatility insurance is expensive, because, historically, realized volatility has been well below the level of volatility implied in…

An IRA With No Fees and No Risk

Huffington Post

According to a recent poll conducted by The Associated Press-NORC Center for Public Affairs Research, two-thirds of Americans earning between $50,000 and $100,000 would find it difficult to come up with $1,000 to cover an emergency. For those earning less than $50,000 a year, that figure increases to 75 percent. A shocking 38 percent of…

Hedge Funds Choke In Crises

ETF

Among the arguments made for investing in hedge funds is that they reduce the tail risks of traditional portfolios. In other words, they are expected to at least avoid the impact of market crises. Unfortunately, the 1998 implosion of Long-Term Capital Management and the global financial meltdown in 2008 demonstrated that this hypothesis is incorrect….

New Angles on the Size Premium

Many investors and advisors who implement multifactor portfolios tend to focus on capturing the value premium over the size premium, often for the simple reason that, historically, the value premium has been larger. Others have even challenged the size premium’s very existence, citing a weak and varying historical record. In both situations, it may be…

©2024 Lucia Wealth