by Brian Harris, Senior Editor, Dimensional Fund Advisors In recent years, structured products have gained favor among retail investors in Europe and the US. Investment banks promote these securities as sophisticated tools to help investors manage downside risk, enhance returns, or achieve other investment objectives. Sales have grown briskly since 2006, and despite a decline [...]

Average Joe smacked by contango, pre-rolling, and Wall Street sharpies; profiting off ‘the dumb money’ The following article from Investor’s News is an eye opener. It is so easy to think investing is easy – think again. And, enjoy reading this article and take heed. Like so many investors in the spring of 2009, Gordon [...]

Recent Market Volatility in Perspective The US stock market has taken investors on a bumpy ride in recent years. This volatility has tested investor discipline and prompted some people to question their commitment to equities. While no one knows the future, looking at the past may help you gain a better view of long-term market [...]

Rebalancing Act Global diversification gives investors a valuable tool for managing risk and volatility in a portfolio. But smart diversification has an important side effect. It requires maintenance. In a given period, asset classes experience divergent performance. This is inevitable and, in fact, desirable. A portfolio that holds assets that do not perform similarly (i.e., [...]

Why would anyone purposely buy the most risky, meaning volatile, asset class for their investment portfolio? Because, it will provide the highest expected return. How has that worked out for investors during 2009? Great, actually. The Emerging Markets asset class is the most volatile broad asset class there is. How was the performance last year [...]

In the past five years, actively managed stock and bond funds have shown a significant rate of non-survival, and among the survivors, only a few have consistently outperformed their category benchmark. Some people claim that strong financial markets offer opportunities for active managers to add value, while others say that active management works best in [...]

Research indicates that humans are not naturally wired for prudent, long-term investing. Scott Bosworth, Vice President and Regional Director, describes common forms of behavioral bias and discusses how these biases influence investment decision making. He also explains how knowledge and discipline can help investors control their instincts for a better investment outcome. (Running time: 20:00) [...]

The statement that a money manager or broker cannot, with consistency, outperform “the market” is cause for a fight with most Wall Street types. So, I guess the first thing we should do is ask and answer, “Is this true that money managers cannot consistently outperform “the market”? Let’s begin with some factual data and [...]

Widely cited as the father of the efficient market hypothesis and one of its strongest advocates, Professor Eugene Fama examines his groundbreaking idea in the context of the 2008 and 2009 markets. He outlines the benefits and limitations of efficient markets for everyday investors and is interviewed by the Chairman of Dimensional Fund Advisors in [...]

Anyone who has been to a fortune teller who reads tea leaves will tell you that if you stare at the patterns long enough, the remnants in your cup can magically begin to look like the vision of the future the fortune teller is foretelling. In the realm of investing, the same is true with [...]