Anatomy of Portfolio Trading

No matter how carefully a portfolio coordinates with an investor’s objectives and risk tolerance, poorly conceived and executed trades can undercut its long-term success. Although intelligent trading is critical, most investors find it opaque. Confusion arises, in part, because the popular term ‘trader’ connotes someone who trades to maximize short-term profit and loss [P&L]. P&L-oriented… Read more »

Winning the Investment Game: Part Two

As with many financial decisions, deciding what to buy comes down to dollars and cents. You could be in the market for a new house, a new health insurance policy, or investment advice. Whatever the case, you want to make sure costs are justified in terms of the products and services that you receive. In… Read more »

Winning the Investment Game: Part One

A person saving for retirement who chooses low-cost investments could have a standard of living throughout retirement more than 20% higher than that of a comparable investor in high-cost investments.  — William Sharpe, Nobel Prize winner in Economics What are the two most effective long-term strategies for achieving investment success? Investors often guess “picking good… Read more »

What is Active Management? Does it Work?

Active management involves hiring a manager, or a team of managers, to select and time a fund’s portfolio holdings. Active managers rely on analytical research, market forecasts, price valuation, economic outlooks, and personal judgment to make investment decisions. Investors who believe in active management implicitly reject the efficient market hypothesis. They believe it is possible… Read more »

Reducing Investment Costs: Past Research and Future Strategies

Financial economists use the terms “portfolio friction” or “investment slippage” to describe the detrimental consequences of investment costs (including taxes paid on investment earnings). Recent studies suggest that cost control may be more important to investment results than other factors that have historically received greater attention, such as security selection and market timing. This essay… Read more »

Investment Advisor Transparency and the SEC

The Securities and Exchange Commission has put out a list of questions entitled: Investment Advisers: What You Need to Know Before Choosing One. These questions are just the tip of the iceberg. We believe in open communication and transparency. Please read the SEC’s guidelines, and our plain English answers to their questions and much more about… Read more »