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What Should We Expect from Stocks?
The past year or so has provided a vibrant debate about the long-term returns stock market investors should expect. Part of this discussion has been driven by the long-term return assumptions used by public pension plans in the U.S. It’s also been driven by the great stock market performance of the past few years and how that should impact long-term expected returns. Further, some investors seem to be worri....
Investment Taxation in 2013
Now that we have a bit of certainty around taxation (in 2013 at least…hopefully…right?) I wanted to explore some of the high level implications.
Ordinary income and capital gains
The newly instituted 39.6 percent marginal federal tax rate and the Medicare surtax of 3.8 percent means the burden of short-term capital gains and ordinary income has ....
When Will Rates Go Back to Normal?
Interest rates have already been lower for longer than many market pundits have expected. The big question is: How much longer will they stay low?
Those who ignored these pundits and modestly extended maturity during this period have been well rewarded. As one example of this, the total returns from rolling over one-month Treasury bills and holding five-year Treasury bonds wer....
Reviewing the SPIVA Scorecard
I spent some time this weekend reading Standard & Poor's mid-year 2012 scorecard report, which is an absolute wealth of analytical information on how traditional active managers are doing relative to benchmark indexes. As prior academic work has generally noted, the results haven’t been great. The S&P study is interesting because it’s updated twice a year and covers U.S. stock funds, internatio....
Europe Update and Investing in a Low-Rate Environment
I recently did a webinar for some of my firm's clients where we discussed recent developments in Europe and the challenges of investing in a low-yield environment. I thought it would be helpful to share that video with you here. If you have any questions or comments, please let me know in the comment field below.
Note that the webinar wa....
Issues to Consider With a High-Dividend Approach
While the financial media tout high-dividend strategies as alternatives to other prudent investment strategies — such as equity strategies or high-quality fixed income portfolios — there are several issues you should consider. First, a high-dividend strategy is far riskier than a high-quality fixed income approach, so comparing the two is like comparing apples to oranges.
Second, it is well known within financial academia that a high-dividend strategy....