Tag: Investment

  • Should Gold Be in Your Portfolio?

    Many well-respected investors and finance writers—from Warren Buffett to Burton Malkiel (author of Random Walk Down Wall Street)—do not believe that investors should own gold as part of their investment portfolios. However, many other investors and commentators argue that gold does belong in most portfolios. Who’s right? In this post,…

  • How Much Real Estate Should I Own? Examining Real Estate Volatility

    In a previous post, we saw that real estate is by market value the largest asset class in the world. According to most interpretations of the efficient market hypothesis, this fact suggests that real estate should be a part of most portfolios that adopt an indexing approach. In this post,…

  • Are Bonds One Asset Class, or Multiple?

    Theory and history suggest that for bonds, changes in interest rates are the dominant risk factor. Most of the rest of the risk is explained by credit risk. History also shows that in times of greatest stress, credit risk and liquidity risk can dominate interest rate risk. These characteristics can…

  • The Capital Market Line—Is it the Holy Grail?

    In a previous post, we introduced the concept of the efficient frontier. The efficient frontier concept is frequently presented in a graph, such as the following. Capital Market Line Now comes the insight of a single “efficient risky portfolio.” The assumption is that an investor can choose to allocate his…

  • Do You Know How You’re Influenced by Modern Portfolio Theory?

    Almost everyone believes that you should diversify your assets – but there are different explanations about why. It is sometimes said (though how anyone would know is another story) that fish are not aware that they swim in water. Similarly, many investors today live in a world shaped by many…

  • Are Capitalization-Weighted Indexes (Like the S&P 500) Inferior?

    Most financial advisors agree that it’s difficult to beat “the market”. It’s easy to define “beat the market” as generating an investment return (typically before tax, and typically ignoring transactions costs) that is greater than the market return. But what, exactly, is “the market”? Which Stocks in the Index? In…

  • The Rise of Index Investing—And Why You Should Care

    The indexing approach to investing accounts for over half of US equity investments in 2025. Compare that to the 1970s, when it was almost non-existent. Among many investors and their advisors, indexing has become conventional wisdom. There are good reasons for indexing’s growth. The case for indexing is strong, and we will…

  • Tesla Without Musk? What Then?

    When we last blogged about Tesla almost a year ago,[1] we advised “If Tesla won’t own the world, consider selling your shares.” Tesla was then trading at $269 per share. And since then, it doesn’t look like Tesla will own the world. Tesla shares closed on Friday at $178 each.…

  • Estate Exemption: Hidden AUM Opportunities

    The lifetime estate tax exemption now is about $13.6 million for an individual and $27.2 million for a couple. Under current law, the exemption is scheduled to drop, about in half, on January 1, 2026. The new exemptions[1] will be about $7 million for an individual and about $14 million…

  • Does This Terrify You?

    Does it terrify you that this man has the President’s ear in economic matters? Here is a video of President Biden’s Chairman of the Council of Economic Advisors trying to explain, well, you use your own judgment. I’m not sure what he’s trying to explain. Does it terrify you that…