Investing Lessons from 2016 that Ben Graham May Give a Nod To

It’s the time of year when holiday party-goers lament their seasonal overindulgences and commit to “turning over a new leaf” on January 1st— promises to hit the gym every day, clear the pantry of junk food and turn off devices during family time are among the hopeful resolutions traded over hors d’oeuvres and prosecco. It’s also a time for reflection on the year that’s passed and setting in place a plan for the year ahead.… Read More

The Trump Rally, Market Timing and Picks

The post-election surge in stocks underscores the risk inherent in trying to time the market. In a recent article for TheStreet, Validea CEO John Reese discusses how investors, by “falling victim to elections, emotions or headlines” can miss out on returns. The goal, he argues, should be to invest in fundamentally sound businesses and avoid “jumping in and out of the market due to knee-jerk, emotional reactions.” Using his guru-based stock screening models, Reese identifies… Read More

Avoid Investing Inertia

When investors sit on the sidelines in fear of “missing out,” that may be precisely what they end up doing, says Allen Roth in last month’s Wall Street Journal. Roth, founder of the financial planning firm WealthLogic, says “over the past several years, many people have come to me with cash-heavy portfolios,” citing a host of reasons including the pending election, global turmoil, and interest rates. According to Roth, however, this mindset is really a… Read More

Market Timing Indicator Kicks off Rare Buy Signal

Most would agree that valuations in the current mature bull market make buying equities a bit less alluring than they were, say, when the U.S. was emerging from the 2008 global financial crisis. However, according to a MarketWatch article by Mark Hulbert, an indicator referred to as the Coppock Guide is suggesting that the potential still exists for “significant returns.” Edwin Coppock was a technical analyst who proposed his market-timing model in an article for Barron’s in… Read More

The Risk of Market Timing

Again and again, investors are advised against trying to time the market, but it somehow fails to keep them from “doing dumb things with their savings.” At least that’s the opinion of Spencer Jakab, who writes on the subject and much more in his new book entitled “Heads I Win, Tails I Win”. Earlier this month, The Wall Street Journal published an excerpt of the book in which Jakab spins an elaborate metaphor of failed… Read More

Asness and Arnott Talk Market Timing, Smart Beta and Behavioral Biases

Maybe not always. At least that was the upshot of a debate between Cliff Asness of AQR and Rob Arnott of Research Affiliates, panelists at the recent Morningstar conference in Chicago. Although they debated various topics, they seemed to agree that value stocks deserve attention when they’re cheap. According to Asness, founder and managing principal at AQR, “Timing the market is hard and we call it a sin, but we recommend that investors sin a… Read More

When the Going Gets Tough, the Rich Take a Hike

A new study has found that folks in the top 0.1% tax bracket run for the exits fastest on the days when market volatility spikes (according to government data collected in 2008 and 2009). According to Bloomberg News, the idea behind the study was that different people react with varying degrees of urgency amidst signs of trouble, which can in turn feed market meltdowns. So why do the rich bail more quickly? According to one author of the report, there are a few possibilities: Wealthy people have more at… Read More

What are Investor Returns, Really?

There is some confusion around why the total investor return data published by Morningstar differs from the returns that investors are actually earning. Russ Kinnel, director of manager research for Morningstar, unravels the discrepancy. Investors’ actual returns, explains Kinnel, are the dollar-weighted returns that reveal how well investors used the fund and how well they timed their transactions. If, for example, investors buy into a fund because it’s showing great returns, this flood of dollars… Read More

Hulbert on Market-Timing Sentiment and a Contrarian View

In his MarketWatch column, Mark Hulbert discusses the relationship of market timers and contrarians when it comes to sentiment and market performance. Noting that it is possible “short-term market timers will be right,” Hulbert observes that “more often than not in the past, the market timing community has gotten it wrong – especially when they’ve coalesced around an extreme position.” And right now, his Hulbert Nasdaq Newsletter Sentiment Index (HNNSI), which is Hulbert’s most sensitive… Read More

Rekenthaler: 3 Options for Outperformance

John Rekenthaler of Morningstar asks “what are the possible paths to outperformance?” and comes up with three options. Find the “market’s dummies”: First, he says, there is the “traditional approach” in which “there seems to be plenty of opportunity for the gifted minority to relieve the dumb of the burden of wealth.” But, Rekenthaler maintains, “it hasn’t worked that way.” Instead, “most of the stock market’s would-be wolves have instead been deceived sheep – dumb… Read More