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Passing Shots

The Fifth Set Blog

Some Welcome Clarity on Trade Policy

In a recent New York Times article, Surprising Truths About Trade Deficits, Gregory Mankiw provides a welcome bit of clarity on trade policy.  Mankiw is a professor of economics at Harvard University, chairman of the Council of Economic Advisers under President George W. Bush and,  …read more »

Stock Valuations are High: Five Things to Do (and Not Do) About It

Stock market valuations are at historical highs and we are more than nine years into the current bull market. It stands to reason that the bull market won’t continue indefinitely. So, not surprisingly, investors are voicing more frequent concerns about high stock market valuations and  …read more »

Buy Low and Sell High: Simple but Not Easy

Buy low, sell high…maybe the most obvious axiom in investing.  It seems so obvious, yet in practice, most investors have difficulty buying the worst-performing assets or selling the best-performing assets.  “Wait…you want to sell this thing that’s been going straight up so we can buy  …read more »

Diversification: It’s about more than risk control

“Diversify your portfolio!” implored the well-meaning investment advisor. Over the years, you have likely heard this phrase many times and from many sources, including me. ‘Diversification’ has been drilled into the head of many an investor and for good reason: Diversification[1] is, in fact, a  …read more »

Why an Allocation to Bonds Always Makes Sense

A decline in stock prices during a bout of market volatility often elicits the comment that “this is a buying opportunity because markets always bounce back”.  From a historical perspective, that’s generally been true but is it possible for a stock drop to be something  …read more »

A Brief History of the Index Fund

On the 40th anniversary[1] of the launch of the First Index Investment Trust (now the Vanguard 500 Index Fund), it is interesting to note how the original premise of index funds has held up over time.  The premise that a low-cost, unmanaged fund, simply composed  …read more »

Using the Fama/French Five Factor Model to Assess Actively Managed Fund Performance

A recent study conducted by Dimensional Fund Advisors assessed the performance of actively managed mutual funds by comparing fund performance to the performance predicted by the Fama/French five factor model.  The five-factor model tests fund performance based on their exposure to the market, value, size,  …read more »

Investor (Mis)behavior

A well-written recent New York Times article seeks to elucidate the causes of investor (mis)behavior through recent research into behavioral finance.  In the article, the author, Gary Belsky, details five cognitive biases that are hard-wired into human brains.  These biases form the basis for investor  …read more »

Dangerous Investment Advice

A recent New York Times article titled “How Much of Your Nest Egg to Put Into Stocks? All of It” makes an unusual argument that investors should invest all or nearly all of their retirement assets in stocks. The author, David Levine who previously founded  …read more »

A World Without Stock Picking Skill – Revisited

In a follow up to an S&P Dow Jones Indices Study from the summer 2014 “Does Past Performance Matter? The Persistence Scorecard”, a New York Times article takes a look at the performance of the two “winning” mutual funds from the 2014 study. Winning, in  …read more »