What Is a P/E Ratio and Why Does It Matter?

P/E Ratio

*+-You’ve probably heard financial analysts advise that a stock is overbought or oversold, or that it has a high or low valuation. But what exactly does that mean?  The concept underlying those assessments is the price-to-earnings ratio (P/E), and understanding it can provide insight into whether a stock is being traded at a price that… Read More


Estimating the Real Costs of Investing

Geoff Considine

*+-One of the least-understood aspects of investing among individual investors is the total costs associated with building and maintaining a portfolio.  In comparison to the huge rises and falls that we see in the market, the expenses associated with mutual funds or brokerage costs may sound small.  Over long periods of time, however, the ups… Read More


What Are the Core Asset Classes for Income Portfolios?

Geoff Considine

*+-In a recent post, I presented a list of the ‘core asset classes’ that investors need in order to build portfolios that fully exploit available diversification opportunities.  That article focused on portfolios designed for total return potential, the combined return from price appreciation and income generated by the assets in the portfolio.  For investors focusing… Read More


Why Mutual Fund Managers May Not Act in Your Best Interest

Geoff Considine

*+-Jeremy Grantham has produced yet another truly outstanding essay in GMO’s Quarterly Letter to Investors for April 2012.  Never reluctant to take on controversy, he focuses on the ways in which mutual fund managers have strong incentives to behave in ways that are often not in the best interests of investors in their funds.  In… Read More