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Passing Shots

The Fifth Set Blog

Topics: Active vs Passive, Asset Allocation, Bonds, Efficient Market Hypothesis, Evidence-Based Investing, Index Investing, Portfolio Management, Uncategorized

Investors Are Usually Wrong

In a recent New York Times article, Jeff Sommer, discussed the implications of new data from Dalbar, a research firm that studies the behavior of mutual fund investors.  Their latest research shows that over the past 10 years, stock investors under-performed the S&P 500 by  …read more »

Interest Rate Changes and Stock Returns – A Way to Actively Position Stock Portfolios?

Jerome Powell, Chair of the Federal Reserve recently signaled the Fed’s readiness to cut the target for short term interest rates (federal funds rate) at the next meeting on July 30th and 31st.  According to the Federal Reserve Bank of Atlanta, as of 7/19/19, the  …read more »

The Guru and The Investor: Act 2 – The Evidence-Based Advisor Strikes Back

Act Two The Setting Following his interview of a hedge-fund manager to see if he should manage his retirement assets, the Investor turns his search to a different type of advisor, for a philosophy based on something called ‘evidence-based investing’.  This seemingly outlandish idea is  …read more »

The Evidence is in (Again). Indexing Beats Active Management.

S&P Dow Jones Indices released their latest SPIVA (S&P Index vs Active) scorecard for the period ending December 2018.  If you’re a fan of active fund managers, the news is not good. Following are some quick data points and a video from NBR with Bob  …read more »

The Guru and The Investor: A Hedge Fund Story

Act One The Setting Guru appears on CNBC to explain what will happen with interest rates, Brexit, and the economy over the next two years.  Investor sees Guru on TV and assumes that CNBC would only have people on their shows who knew what they  …read more »

Déjà Vu All Over Again

Investment fads do not lead to investment success.  Discipline to a long-term investment strategy is the key.   This post from Dimensional Fund Advisors offers a compelling rebuttal of past investment fads and an alternative investment approach driven by evidence and academic research…    

The S&P 500 vs. The World: S&P 500 Returns Have Been the Best So Why Bother with Anything Else?

  From January 2014 through August 2018, the S&P 500 Index, driven by the strength in large growth stocks, particularly large technology stocks, has bested the rest of the major global asset classes by a wide margin. The chart below shows how the S&P 500  …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 »