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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 »

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 »

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 »

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 »

Why There is Always the Potential for a Bear Market (and Why That’s a Good Thing)

A recent WSJ article explains why bear markets can occur at any time. The article emphasizes a common point made by FSIA with its clients, that the higher expected return from equities is compensation for the additional risk of holding stocks. It is exactly because  …read more »