Words of Market Wisdom from the Father of Efficient Markets
Much of Fifth Set’s investment philosophy is drawn from the academic research findings of University of Chicago Professor Eugene Fama. A 2013 Nobel laureate in Economics, Professor Fama was recently interviewed for a New York Times article “Talking War and Market Volatility With a Giant of Economics”. With increased market volatility reflecting the continuing impacts […]
“The Market” has Recovered its Coronavirus Losses, but Most Stocks are Down Year-To-Date
How we, as investors, define “the market” can obscure actual investment experiences. To illustrate, look at the following four measures of 2020 year-to-date returns through June 16th. S&P 500 (Large U.S. Stocks): -2.4% Russell 3000 (Broad U.S. Stocks) -2.8% Russell 3000 median stock: -17.6% FAANG[1] (equal-weighted portfolio): 23.9% Two common measures of U.S. stock performance, […]
Great Stock Market, Horrendous Economy, What is Happening Here?
From March 24th, 2020 through May 26th, 2020, the stock market, as measured by the S&P 500, returned 36%. That is not typo. Over the same period of time, we have seen a torrent of terrible economic news. For example, on April 24th, the Congressional Budget Office (CBO) released updated economic forecasts that included the following:
The Coronavirus Market Meltdown Continues – Two Ways to Place the Volatility in Context
This morning global equity markets continued the recent volatility around the Coronavirus’ human and economic impacts. As of this morning, the S&P 500 is trading down roughly 5% and since February 20th, 2020, the S&P is down roughly 17%. The uncertainly around the virus and the volatility of equity markets are reasons for investors to […]
IPOs – High Profiles, Low Returns – Following the Evidence
One of the benefits derived from the evidence-based investment approach is the systematic avoidance of underperforming investment strategies. Media narratives and marketing drive many of these strategies, that while they might help increase advertising sales and commissions, do little to help investors develop successful investment portfolios. One such currently popular strategy is investing in newly […]
Seven Bullet Points to Address Investor Client Standard of Care
The financial advice industry has long been separated between 1) Registered Investment Advisor firms (RIAs), which operate under the Investment Advisers Act of 1940 and whose representatives’ duty is to deliver investment advice, and 2) Broker-Dealers, whose representatives are in the business of selling financial products. Previously, there was a clear distinction between the standard […]
U.S. News & World Report: Ian Post on “7 Ways Millennials Are Becoming Great Investors”
Read Ian’s comments in a recent U.S. News & World Report article that looks at what we can learn from the way Millennials invest… Millennials know to start saving early. The best thing you can do for your investments is start early. “Through compounding and time, investors can grow their wealth by saving and investing […]
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 grounded in the findings of academic research in finance to […]
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 Pisani detailing the results: For the ninth consecutive year, the […]
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 were talking about. Needing a place to invest money for […]