Both Dimensional Fund Advisors and Vanguard have published their 2019 stewardship reports for investors. These reports focus on the money managers' duties, responsibilities, and actions in the corporate governance area, including board composition, executive pay, and environmental and social concerns. We want to highlight the availability of these reports and are happy to discuss them with you in more detail if this is of interest. Read them here:DFA 2019 Annual Stewardship ... [Continue Reading]
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Our recommended reading today is a throwback to March 27, 2019, when we published Why We Won’t Panic Because the Yield Curve Inverted (And Neither Should You). In that post, we shared a number of reasons why we advised against reading into a yield curve inversion too deeply. One reason we cited was that while a yield curve inversion had a strong track record of predicting recessions in the U.S. over the past 60 years, the evidence internationally was less convincing. Another reason ... [Continue Reading]
The long-awaited IPO of Saudi Aramco is here and gives investors the first chance to own a piece of the world’s largest oil company. This IPO is historical in that Saudi Aramco becomes the world’s first $2 trillion company. For perspective, very few companies have ever been valued at over $1T, with Apple and Microsoft being the only two publicly traded companies to currently hold that designation. So, should investors race to grab a piece of this gigantic company’s stock? While ... [Continue Reading]
Understanding how markets function is critical when making investment decisions. This is why Hendrick Bessembinder’s 2018 study of historical stock returns was so important; it revealed to investors that the vast majority of individual stocks underperform. This information is critical. It helps us better understand why active stock-picking managers underperform at such a high frequency, and it gives us a deeper understanding of the importance of portfolio diversification--not just to mitigate ... [Continue Reading]
Research demonstrates that over the past 50 years, every U.S. recession may have been predicted ahead of time by using one simple indicator--the spread between short and long-term government bonds. Usually, long-term bonds offer higher yields than short-term bonds due to the additional risk that an investor assumes when buying bonds with longer maturities. However, every once in a while the dynamic flips, where short-term government bonds offer higher yields than long-term government bonds. This ... [Continue Reading]