Why Industry Bubbles Burst and How to Weather the Storm

Why do industry bubbles burst? And how does it affect your investment portfolio?

With housing prices making a strong recovery since the financial crisis of the late 2000s, it’s worth taking a look at what causes investments or industries to zoom to the stars and then crash back to earth. Industry bubbles generally occur because the incentive for profit is so powerful that it blinds us to rational… Read More

What’s the Best Time for Rebalancing Your Portfolio?

Experts recommend rebalancing your investment portfolio, but how often should you?

Maintaining the right mixture of assets in your portfolio is important to your long-term investment success. Because some investments go up in value over time, and others go down, experts recommend periodically rebalancing your portfolio so that you don’t end up owning too much of some securities and not enough of others. But when—and how… Read More

An Investment Strategy Checkup for the 4th Quarter

Be sure to evaluate your investment strategy at year-end to account for any changes that have happened over the past year.

Don’t look now, but here comes the 4th quarter. The end of the year is a good time to take a look at whether you’re on track with your investment strategy. Don’t wait until the end of December. That could force you to make decisions or take actions too hastily. First, review your financial goals…. Read More

Will the Current European Economy Affect Your Investment Portfolio?

European Economy

Collectively, the European Union (EU) has the largest economy in the world as measured by gross domestic product (GDP). Last year the total value of all goods and services produced within the 28-member EU totaled 14.3 trillion euros, according to the International Monetary Fund.[1] But the European economy has been languishing, and due to its… Read More

A Primer on Portfolio Rebalancing

A Primer on Rebalancing

If you’re a successful long-term investor, you take great care in aligning your investments to an asset allocation that’s appropriate for your goals. Shouldn’t you care just as much about keeping that asset allocation on target? The “buy and hold” approach to investing appeals to many, and for some good reasons. But the fact is,… Read More

Sector Watch: Low-Beta Stocks

Geoff Considine

Financial theory suggests that risk and return go hand-in-hand: Small company stocks tend to be riskier and outperform large company stocks. Long-term bonds tend to be riskier and outperform short-term bonds. Corporate bonds tend to be riskier than Treasury bonds (with comparable terms) and outperform Treasuries over time. However, there is one group of stocks… Read More

The Biggest Unknown in Financial Planning

Geoff Considine

In a recent blog post, I reviewed a new book on the future of the Equity Risk Premium (ERP).  For those who are not familiar with the ERP, it is the additional return that investors expect to receive for bearing the risk of owning company stock vs. owning a low-risk asset like government bonds.  As… Read More

Dr. Andrew Lo: ‘Buy and Hold’ Does Not Work Anymore

Geoff Considine

Dr. Andrew Lo is a thought leader in the world of portfolio management. The MIT/Sloan School of Management professor and Director of MIT’s Laboratory for Financial Engineering has been widely quoted on the implications of the 2008 financial crisis. One theme that Dr. Lo emphasizes repeatedly is that the risks associated with different asset classes… Read More