Tag: Asset Classes
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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,…
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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,…
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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…
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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…