Many investors are easily persuaded that successful investing requires constant attention to current events and frequent adjustment of their equity exposure. Daily market news and commentary can influence and challenge your investment discipline. Some messages stir anxiety about the future while others…
The idea behind investing is to buy low and sell high. Yet, many people struggle to separate their emotions from investing. Markets go up and down. Following an emotional investment cycle sparked by reactive decisions may lead to making poor…
Even with a globally diversified portfolio, market movements can tempt investors to switch asset classes based on predictions of future performance. But as shown in the below table, there is little predictability in asset class performance from one year to the…
Many people concentrate their investment in their home stock market. They choose only US stocks and mutual funds and consider their portfolio diversified. In some cases, they only hold a small group of securities. Yet, from a global perspective, limiting…
Rather than viewing the market universe in terms of individual stocks and bonds, investors can define the market along the dimensions of expected returns to identify broader areas or groups that have similar relevant characteristics. This approach relies on academic research…
Most people look to the financial markets as their main investment avenue—and the good news is that the capital markets have rewarded long-term investors. The markets represent capitalism at work in the economy, and historically, free markets have provided a…
Some investors use mutual fund track records as a guide to selecting funds, reasoning that a manager’s past outperformance is likely to continue in the future. Does this assumption pay off? The research offers strong evidence to the contrary. This…
Many fund managers believe they can identify “mispriced” securities and convert that knowledge into higher returns. But the market’s pricing power makes it difficult for investors who try to outsmart other participants through stock picking or market timing. In this…
The ups and downs of the market can make for a stressful investing experience. Selecting the “winning” stocks and timing the market so you buy and sell at just the right time is a challenging feat, and placing the right…
In fact, many predictions about Wall Street have misread the market’s direction. Trying to determine how Wall Street will behave next week, next month, or next year is difficult. Some feel it is impossible. To predict the near-term direction of…
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