Investments

This may be one of the strangest investment stories of the year: Jim Cramer, the cable television madman who rants about buying stocks, now says most investors should use index funds. Wait a minute, this isn’t the same Jim Cramer who ran a hedge fund and whose Mad Money show on CNBC nightly touts individual stock plays, is it? You […]

Recession fears, rising unemployment, and stock markets plunging worldwide: What’s a poor investor to do? Not only are the headlines scary and unsettling but so are the monthly statements from your broker showing a drop in your portfolio value. It can be very hard to maintain your focus and long-term commitment to the stock market when investors all about you […]

One of the hardest things to accept about the stock market is its volatility: prices rise and fall day to day, month to month, and year to year. One month an investor’s account has grown to a certain level, and the next month it has fallen back a few percent from that high, making the investor feel like he has […]

Some workers who invest in stocks through their employers’ 401k plans proved to be fickle investors this summer. In August—after sharp stock market declines in July—a near record amount of 401k money was yanked from the stock market, says Hewitt Associates LLC, a human resources consulting firm. Hewitt’s index of 401k investments showed that plan participants shifted $765 million from […]

For the last few years there has been a steady drumbeat out of Wall Street touting the advantages of “alternative” investments for well-to-do investors. The alternative crowd argues that plain old stocks and bonds and mutual funds are no longer good enough for sophisticated investors. Instead, they need a dose of hedge funds, private equity investments, and venture capital deals […]

Since the subprime mortgage mess hit the markets like a bombshell earlier this year, economists and analysts have been working harder than ever to forecast its future effects. Forecasting potential outcomes is big business in the financial markets, and there is no dearth of “experts” and TV talking heads telling us what lies ahead. Their record of prediction is pretty […]

Groundbreaking investment research from 1992—supported by other studies since then—indicates that value stocks and small stocks outperform the stock market as a whole. Recently, professors Eugene F. Fama of the University of Chicago and Kenneth R. French of Dartmouth—authors of the 1992 study—have identified another important component of stock returns: the higher returns of small and value stocks are due […]

Among the many peculiar word constructions former Secretary of Defense Donald Rumsfeld is remembered for, there is one that applies to all forecasts of the future: the “unknown unknowns.” In his words, they are “the ones we don’t know we don’t know.” That phrase, incidentally, was already commonly used in the Defense Department and elsewhere in its shortened version, “unk-unk.” It […]