Market Summary – Q3 2013
The Royal Swedish Academy of Sciences announced on October 14, 2013 that Eugene Fama, Professor of Economics at the University of Chicago will share in this year’s Nobel Prize for Economics.* We congratulate Gene Fama on the recognition he has achieved. It was his research and teaching along with co-author and collaborator Professor Kenneth French ( Dartmouth) on efficient markets and Small Cap and Value investing that provided the insight and inspiration to David Booth who went on to found Dimensional Funds Advisors (DFA). Dr. Booth earned his PhD under Professor Fama in the early...
Read MoreMarket Summary – Q2 2013
The US Stock market continued to deliver strong gains this past quarter with the broader index (as measured by the S&P 500) gaining almost 14% year to date through June 30th and ahead almost 3% for the quarter. As it happened, most of the other asset classes we invest in were not invited to the party and generally lost ground over the past three months. Some of the safest investments were hardest hit such as bonds – which lost value as interest rates rose. Treasury Inflation Protected Securities, also known as TIPS, lost over 7% for the quarter, the majority of which occurred in...
Read MoreOctober 2013: Nobel Prize to Efficient Market Pioneer
The Royal Swedish Academy of Sciences announced on October 14, 2013 that Eugene Fama, Professor of Economics at the University of Chicago will share in this year’s Nobel Prize for Economics.* We congratulate Gene Fama on the well earned recognition he has achieved. Fama’s research with long-term collaborator Professor Kenneth French from Dartmouth has been focused on the efficiency of markets and the higher expected return from small company and cheaper [value] stocks. This provided insight and inspiration to David Booth, a former student, who went on to establish Dimensional Funds...
Read MoreSeptember 2013: Where Are The Bargains Now?
As we write this, the US Stock Market appears to be on fire, with the S&P 500 gaining over 20%1 year to date and over 60% in the past 3 years! During much of the four year plus stock market recovery since the lows of March 2009, money continued to flow out of stocks and into bonds despite the recovery taking place. That sentiment has suddenly reversed in 2013 with positive flows into equity mutual funds and ETFs. The “risk on” sentiment has provided price support for the broader equity market and helped to create a receptive market for a host of IPOs, most recently announced –...
Read MoreAugust 2013: The Art of Letting Go
The Art of Letting Go The Chinese philosophy of Taoism has a word for it: “Wu wei.” It literally means “non-doing.” In other words, the busier we are with our long-term investments and the more we tinker, the less likely we are to get good results. That doesn’t mean, by the way, that we should do nothing whatsoever. But it does mean that the culture of “busyness” and chasing returns promoted by much of the financial services industry and media can work against our interests. The fund managers we work with constantly review the holdings and make changes in individual stocks or bonds to...
Read MoreJune 2013: Deficit Owl turns Heads at Conference
Are we reducing deficits too quickly? At the end of May, Tim and Dave attended the annual meeting of the Northern California Chapter of the Financial Planning Association (FPA). This two day meeting is widely regarded as one of highest quality meetings of its kind and we make a point of attending each year. One of the most surprising takeaways was a keynote presentation by Stephanie Kelton, Ph.D., chair of the Department of Economics at the University of Missouri-Kansas City. Speaking to an audience of 500 professional financial advisors that consider themselves financially literate, she...
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