As company-sponsored pension plans are replaced with self-managed 401(k) plans and IRA accounts, American families are increasingly becoming more responsible for the management of their retirement funds. While this shift has allowed for greater freedom and choice, it has also exposed investors to product salesmen who may not have the client’s best interest at heart. The Department of Labor fiduciary rule, announced earlier this year, aims to end this abuse, which the White House Council of ... [Continue Reading]
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Active versus passive investment management was once a healthy theoretical debate in the world of financial academia. However, in recent years-- as the research pours in, we see that the fees, transaction costs and poor tax management by active managers simply present too many hurdles for active managers to clear and outperform. Year after year, active managers produce returns that, on average, underperform their benchmarks. As we lengthen our timeframe and look back over 10 or 15 years, active ... [Continue Reading]
Periodically during a presidential election cycle, we receive questions from clients about the desirability or wisdom of altering the composition of a portfolio based on what might unfold after the election. Dimensional Fund Advisors recently published an excellent new article addressing this topic titled, “Presidential Elections and the Stock Market.” In this article, Dimensional finds that historically, volatility and returns are not noticeably different based on which political party is ... [Continue Reading]
“If you can predict the future, you shouldn’t worry about being diversified” – Greg Carlson, CCM CEO and Co-Founder Diversification has many benefits for investors when utilized appropriately. A diversified portfolio can have lower volatility, higher returns and increase the probability of a successful retirement. Because portfolio diversification is so universally accepted and often coined as ‘the only free lunch in investing,’ people frequently assume that it will only have a positive ... [Continue Reading]
Warren Buffett’s famous bet in 2007 that a low cost S&P 500 index fund would outperform a group of five prominent hedge fund managers is nearing its end. Without a sudden change in fortune, the low cost index fund is set to more than double the returns generated by the group of hedge fund managers. As noted by Money Talk News founder, Stacy Johnson, in Karla Bowsher's article “3 Lessons From Buffett’s Million-Dollar Wager,” this bet is simply another reminder of how difficult it is to beat ... [Continue Reading]