Tax Loss Harvesting

Tax Loss Realization is a Savvy Way for Investors to Reduce Tax Liabilities An advantage of having taxable accounts in your portfolio is the ability to use losses (when available) to lower your tax liabilities. This is called tax loss harvesting or tax loss realization. Here are the benefits: Tax losses represent a deferral of… Read more »

Update on the Value Premium

Empirically, in most countries, the long-term realized returns from value stocks are greater than growth stock returns.  Why this should be so, however, remains a puzzle.  Indeed, in some recent years, the value premium is negative when measured by the returns of certain value and growth stock indexes.  Indeed, some commentators suspect that the value… Read more »

Bond Strategies in the Face of Rising Interest Rates

Many investors understand maximizing return as the obvious primary goal of investing. Yet most financial economists would argue that the primary purpose of a portfolio is, not to maximize return, but to enhance the likelihood of achieving specified financial objectives at an acceptable level of risk. Returns are great; risk, less so. Yet the opportunity… Read more »

Understanding Inverse Leveraged ETFs – Advanced

This is a working paper authored by Patrick Collins on Inverse Leveraged Exchange Traded Funds (ETFs). It is a moderately advanced article laced with some complex investment concepts and calculations. Like artificial sweeteners to your health, Inverse Leveraged investments can be dangerous your investment portfolio. Although this study does not argue that inverse leveraged ETFs… Read more »

Chicken Little and the Financial Crisis

The pipe dream of all investors is to achieve attractive investment return with little or no risk. Some financial firms capitalize on this dream by shaping their marketing campaigns accordingly. The implication is that the firm has the expertise to identify forthcoming market declines—the new catchphrase is “market bubbles”—and to guide investors safely through periods… Read more »

Impact of Investment Expenses

Here’s a chart that compares the tremendous impact of two different schedules of annual expenses on the performance of the same underlying portfolio. DATE: July 2013 Source: Dimensional Fund Advisors.  Rev July 2013 © 2013 Schultz Collins, Inc. All rights reserved.   This document does not constitute a recommendation of or solicitation to provide services…. 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 »

Selecting Vendors for Your Defined Contribution Plan

Individuals responsible for their company’s qualified retirement plan face numerous difficult decisions when selecting plan service vendors. As technologies change, and as plan sponsors seek to shift additional responsibilities to external vendors, the complexity of the assignment increases. In selecting providers for the plan, each vendor’s fees, capabilities and experience must be assessed in each… Read more »

Investment Policy Statements for Defined Contribution Plans

When we first authored a white paper on Investment Policy Statements (IPS) for defined contribution plans in 1999, many DC sponsors seemed reluctant to develop and adopt an IPS. Survey information from the Plan Sponsor Council of America (PSCA) indicates that only about half of DC sponsors maintained an IPS in 1999, and that far… Read more »