While this article does get a little into the technical side of investing this month, its theme is at the core of our philosophy at Waypoint so we think it’s a good reminder to investors and clients. It involves the idea (myth, really) that investors can consistently create “alpha” or out-performance by making changes to their investments (or hiring someone to do so) based on their current opinion with where we are economically or politically or historically. Recently, our Director of Research with the BAM Alliance Larry Swedroe wrote (again) about the truths and myths of “active” investment management and the attempt to outperform:
It’s truly an amazing paradox. According to the Thomson Reuters Lipper second-quarter 2018 snapshot of U.S. mutual funds and exchange-traded products, active funds of all kinds, including money market funds, manage about $16.4 trillion.
That’s more than 2 1/2 times the $6 trillion managed by passive funds and ETFs. That’s also despite the overwhelming evidence that active management is a loser’s game (one that’s possible to win, but with odds of doing so that are so poor, the winning strategy is not to play). > SEE MORE
As we wrote about back in April (10 Ways To Not Sweat The Small Stuff With Investing), market volatility has once again picked up. If you’re like most, this is a news story that will take your attention from time to time. So with that said, we felt like it was a good time to underscore the perennial value of building – and maintaining – a globally diversified investment portfolio for achieving your greatest financial goals.
Global diversification is such a powerful antacid for when (not if!) we experience market turbulence, it’s why we’ve long recommended spreading your market risks:
- According to your personal goals and risk tolerances
- Between stock and bond markets
- Among evidence-based sources of expected long-term returns
- Around the world
In short, broad, global diversification never goes out of style. > SEE MORE
The yield curve is flattening (or growing steeper)! … Yield curve spreads are widening (or narrowing)! … The yield curve has inverted (or normalized)!
Headline-grabbing yield curve commentary somehow sounds important, doesn’t it? But what is a “yield curve” to begin with, and what does it have to do with you and your investments?
> SEE MORE