Category: Investments

  • Is Ethereum an Investment or Just Speculation? A Closer Look

    Ethereum, the “baby brother” of Bitcoin, is in the news again, because its price has tripled since April. Ethereum is variously described as “the world’s leading programmable blockchain,” and a “revolutionary global software platform” but what seems to attract most buyers is the “native cryptocurrency” known as ether and traded…

  • Down 70%? Don’t Let it Happen to You

    Concentrated stock holdings can be risky. Novo Nordisk is just the latest poster child for this fact that everyone knows, but not everyone wants to do something about. Novo Nordisk has fallen from a high of about $142 per share in June 2024 to about $51 per share in August…

  • Why Farmland Might NOT Be a Great Investment

    “Investors Flock to Farmland Amid Market Volatility”[1] screams one headline. “Bill Gates Farmland: Why is the Billionaire Buying So Much?” asks another.[2] “How to Start Investing in Farmland” is a headline from the Motley Fool (The Motley Fool, June 30, 2025). When I typed “is farmland a good investment” into…

  • Is Rebalancing Really a Good Idea?

    Investing involves tradeoffs. Perhaps the primary tradeoff is between expected return and expected risk. Investing is difficult, at least in part, because we can never be sure, when we look into the future, if our expectations about future return or future risk are correct. Given that investing is a balancing…

  • 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,…

  • The World’s Largest Asset Class, and How to Think About It

    In previous blogs, we looked at bonds and stocks as asset classes. We developed an approach based on return factors and return correlations to decide which asset classes should be considered by most investors. In this post, we look at real estate. However, unlike the case with stocks and bonds,…

  • Should Country Be an Explanatory Factor in Investing?

    In previous posts, we looked at a number of explanatory “factors” which may explain the returns on stocks. But there’s one variable we didn’t discuss. For some reason, in the factor literature, the country of a stock is rarely considered to be a “factor.” But in practice, most investors do…

  • How Should We Define Stock Asset Classes?

    In a previous set of posts, we looked at how to think about and define asset classes – as they relate to bonds. Now let’s apply the idea of defining an asset class in terms of characteristics to stocks. From the point of view of theoretical finance, the main difference…

  • 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…