Nobel Laureate on Solving the ‘Nastiest, Hardest’ Problem in Retirement

A few decades ago, Nobel Prize-winning economist William Sharpe—creator of the Capital Asset Pricing Model (CAPM) and the return metric called the Sharpe ratio—turned his attention to the risk Americans face of potentially running out of money in retirement. This according to a recent article in Barron’s. Sharpe created a computer program that covered 100,000 retirement-income scenarios based on different combinations of life spans and investment returns for a retired couple—which is available in a… Read More

Great Advice From (And For) Great Minds

The world often wants top investors and economists and strategists to give advice. But what’s the best financial advice that those great minds have received? The Wall Street Journal posed that question to a number of top thinkers recently. The respondents include Nobel laureates Robert Shiller and William Sharpe, as well as investment gurus Carl Icahn and Seth Klarman. A few of the responses dealt specifically with not falling prey to short term thinking. “An… Read More

The Diversification Debate

In addition to the question of how many stocks they should own, another similar question many investors ask is how many funds or asset classes they should own. In a recent Financial Times column, David Stevenson offers some interesting data on the topic, as well as some comments from top strategists. The “proper answer” to those questions, Stevenson says, is to follow the modern portfolio theory developed by Harry Markowitz, which “suggests that you look… Read More