By: | in Prudence & Fiduciary Duty, Wealth Management.

Recently, a gentleman nearing the age of retirement approached me wanting to know how to maximize his social security income. He is a 62 year old doctor, and his wife is 4 years younger. He made substantially more money than his wife, and as a result, his PIA is $2400, and his wife’s PIA is only $1000…. Read more »

By: | in Economics & Markets, Investor Behavior, Wealth Management.

Did you know that the largest three one-day drops ever to have happened in Dow Jones’ history happened in the month of October? On the 19th of October 1987, Dow Jones fell nearly 23%, making that day the worst day in US stock market history. It was followed by the 24th and 29th of October, 1929, when Dow Jones fell… Read more »

By: | in Wealth Management.

Last year after the market was up about 5% in January, I wrote a newsletter to introduce my clients to the so-called “January Indicator”:

According to research done by Cooper and McConnell, what the market does in January has a strong predictive power for what the market will do for the rest of the year.

Using data since 1940, they found that if the market is up in January,

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By: | in Economics & Markets, Wealth Management.

In the arena of academic finance, the debate overwhether a rebalancing “bonus” exists or not hasbecome somewhat of areligion!

Those who are ardentbelievers of an efficient market such as Nobel Prize winner Eugene Famausually believe all returnsshould be the result of taking risk and that simple actions like rebalancing periodically should not produce additional returns.

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By: | in Economics & Markets, Security Selection & Market Timing, Wealth Management.

Since its inception on March 9, 2003, RSP has returned 193%. At the same time, SPY has only returned 97%. This is extremely puzzling as both RSP and SPY hold the same S&P 500 stocks.The only difference is that SPY is a cap-weighted fund and RSP is an equally-weighted one. This begs the question, is RSP’s outperformance normal; and more importantly, is it likely to continue?

To answer the question I asked my intern Nahae Kim to run a regression based on the

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By: | in Investor Behavior, Prudence & Fiduciary Duty, Wealth Management.

Following the post I wrote about deep risk vs shallow risk, I went to Amazon and flipped through Bill Bernstein’s latest book “Deep Risk” to see if he feels the same way as me.

It turns out there is a lot that we agree on, but not everything.

Here’s where we see eye to eye: 1) our definitions of deep and shallow risks are almost the same: 2) we both see market fluctuation as a shallow risk and 3) we both see inflation as the #1 deep risk.

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