A recent press article said that with major risk assets looking “fully valued,” it was time to seek out alternative investments such as hedge funds. But those thinking of making that shift might want to look before they leap. According to consulting firm McKinsey and Co, hedge funds and other “alternative” investments will command up to 40% of the asset […]
Year: 2014
The Certainty Principle
A frequent complaint from would-be investors is that “uncertainty” is what keeps them out of the financial markets. “I’ll stay in cash until the direction becomes clearer,” they will say. So when has there ever been total clarity? Alternatively, people who are already in the market after a strong rally, as we have seen in recent years, nervously eye media […]
Client Letter – Q2 2014
During the past quarter, REITs performed exceptionally well, with emerging markets stocks coming in with respectable returns also. The U.S. and international markets delivered positive returns in all asset classes. The following chart shows the 3-month, 5-year, and 10-year performance of many DFA funds (representing different asset classes) compared to the S&P 500 Index: Market Returns for the period ending […]
Seven Ways to Fool Yourself
The philosopher Ludwig Wittgenstein once said that nothing is as difficult for people as not deceiving themselves. But while most self-delusions are relatively costless, those relating to investment can come with a hefty price tag. We delude ourselves for a number of reasons, but one of the principal causes is a need to protect our own egos. So we look […]
Don’t put your retirement in jeopardy over college expenses
Middle-aged parents face two huge expenses: college costs for their children and the even larger eventual cost of retirement. Many find it hard to juggle the two and get confused over priorities and where to allocate resources. A recent Gallup survey done for Sallie Mae, the large student lender, found that 6 percent of parents in 2010 had withdrawn money from an […]
Want to retire but cannot control the markets? Save more
The old saying about not worrying about things we can’t control and concentrating on those things we can control applies to retirement planning, says Vanguard, the large mutual fund company. It conducted a study of market returns, savings rates, and investment horizons as they relate to retirement success. It found that savings rates are very important. “Our conclusions reinforce that the […]
Client Letter – Q1 2014
In December 2012, we launched the Sparrow Wealth Management online vault, which provides a secure location for all of your financial, tax, and estate documents. So far, roughly 90% of our clients have logged into the vault using the username and password that we sent via email. For those of you who haven’t logged in yet, please do so soon! […]
The Golden Ticket Trap
In a popular children’s story, the young hero pins all his hopes on finding one of a handful of “golden tickets” hidden among millions of candy bars. It seems many people approach investing the same way. The notion that the path to long-term wealth lies in locating secret and previously undiscovered treasures in the global marketplace of securities is one […]
Client Letter – Q4 2013
What an amazing year!! U.S. small and value asset classes earned over 40% returns, with large U.S. growth stocks and international stocks not far behind in the 20% and 30% percent range. The following chart shows the 1-year, 5-year, and 10-year performance of many DFA funds (representing different asset classes) compared to the S&P 500 Index: Market Returns for the […]
