Monthly Archives: August 2010

John Bogle on Morningstar and Costly Funds

John C. Bogle is without a doubt one of the most listened-to experts on mutual funds in the world. And he should be.  Having created the massive Vanguard fund complex and written eight books on the topic, the depth of his knowledge is unmatched.

Bogle was maybe the first, and has consistently remained for decades, a staunch advocate for low cost mutual fund investing.  Friday in the Wall Street Journal, he weighed in on Morningstar’s recent findings that low cost is the best predictor of a mutual fund’s outperformance, better than its own star system. Continue reading

Shiller: Double Dip, yes. Bond Bubble, no.

If hindsight is 20/20, maybe current perception is more like 50/50. Loads of economists and other experts have recently declared that the bond market has swelled into an unsustainable bubble. Wharton’s Jeremy Siegel among them.

But Yale professor Robert Shiller, an expert in bubbles and the author of Irrational Exuberance, isn’t convinced. Continue reading

Bernstein, Bogleheads, and the Permanent Portfolio

A recent piece by Bill Bernstein on Harry Browne and his “permanent portfolio” has launched an interesting debate on the Bogleheads board. Continue reading

Yale’s Goetzmann on Real Estate in the 2000s and the 1920s

Yale Professor William Goetzmann draws a parallel between the commercial mortgage-backed securities of recent years,  and a real estate bond boom in the 1920s. A boom he argues led to the stock market crash of 1929.

“By nearly every measure,” he and his co-author notes, “real estate securities were as toxic in the 1930s as they are now.”

In an interesting paper from the National Bureau of Economic Research, he and  Frank Newman,  a former research assistant at the Yale School of Management, dig into the bonds that financed the greatest boom in the building of skyscrapers ever. In 1925, 23% of all corporate debt were these bonds. Nine years later, the entire class of investments had nearly vanished. Continue reading

Jeff Ma, Arthur Levitt and Investor Gambling

Jeff Ma knows a good bit about gambling, and he says that’s just what investing is, gambling.  The twist: for his money, long-term, diversified  investors are the smart betters.

That’s because they do three good things: Continue reading

Fox’s Gerri Willis: Don’t Get Too Conservative

Yesterday the New York Times ran a front page piece about how risk-averse investors have become. Long-time personal business correspondent Gerri Willis warns against becoming too conservative.

Willis was CNN’s face of personal finance for many years. Now she hosts her own shows The Willis Report at 5PM EST on Fox Business Network. She calls it “personal finance plus” and covers saving and investing as well as keeping a close on “the money you’re giving to the Federal government  as tax dollars.”  She spoke to Nanette Byrnes from Fox Studios in New York City and here is an edited transcript of their conversation. Continue reading

Jeremy Siegel says we are in a ‘bond bubble’

Jeremy Siegel, Wharton professor and author of well-known Stocks For The Long Run, published an article this week in the Wall St. Journal saying that we are in a bond bubble.  Bubbles are periods of irrational price appreciation in an asset class, followed by a return to rationality when everyone heads for the door and sells.  With yields from government bonds at multi-decade lows, this is hardly a risky call. Continue reading

Behavioral Finances’ Daniel Kahneman Speaks

Often called the father of Behavioral Economics, Daniel Kahneman started studying human behavior in the 1950s during a stint in the Israeli Army. Over the course of his career his curiosity took him into many areas, and his pioneering work on behavioral finance earned him a Nobel Prize in Economics in 2002. The announcement of his Nobel noted that,  “His work has inspired a new generation of researchers in economics and finance to enrich economic theory using insights from cognitive psychology into intrinsic human motivation.” Continue reading

Chinese Bubbles

Chinese bubbles have been a topic of hot debate this summer. Most of the discussion is continued speculation about real estate with apartments in Shanghai now going for $200,000 plus (in a country where the average wage is $4,000). Informed opinions vary widely. Either China’s real estate market is based on speculation and teetering on the brink, or proactive government policy has successfully cooled it down. Continue reading

Portfolio Investing 101: David Neubert

How would you build a portfolio?

We put that question recently to David Neubert.

A man of wide experience, Neubert spent ten years at Morgan Stanley in a number of trading roles including head of Global Portfolio and Program Trading. Then he moved on to Lehman Brothers where he was Head of Equity Trading Strategy and Technology for a couple of years.  He knows how the big institutions on the Street trade. After retiring (early!) in 2005, he spent a few years working on investor education initiatives. Continue reading