Insights

Greece’s economic troubles have been in the headlines for nearly six years now, with its government debt first downgraded in December of 2009.1 But now things are getting serious quickly. With a 1.5 billion Euro default looming, Prime Minister Alexis Tsipras has called for a July 5 national referendum on restructuring proposals from the nation’s creditors. In the meantime, he has closed the banks and the stock market and imposed capital control, restricting ATM withdrawals to 60 Euros per day.
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“I knew it all along.” — All of us, at some point I recently came across a 1998 newsletter piece about hindsight bias by Meir Statman, Glenn Klimek Professor of Finance at Santa Clara University and long-time Loring Ward Investment Committee member. What Meir wrote in 1998 is just as true today. He wrote about a physician who came to him for investment advice in December 1994.¹ The physician worked hard and saved diligently for many years, and by his
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What is the best portfolio for a university endowment (i.e., a portfolio with a really long time horizon)? In 1994 Thaler and Williamson argued that a portfolio composed of 100% equities was a better investment than a 60% equities and 40% bonds (60/40) investment strategy because of the higher long-term rate of return.¹ In 1996 Asness challenged that notion, arguing in favor of a (60/40) portfolio.² In this post I update the data used in Asness’ 1996 paper to see
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Owners of all-purpose motor vehicles often appreciate their cars most when they leave smooth city freeways for rough gravel country roads. In investment, highly diversified portfolios can provide similar reassurance. In blue skies and open highways, flimsy city sedans might cruise along just as well as sturdier sports utility vehicles. But the real test occurs when the road and weather conditions deteriorate. That’s why people who travel through different terrains often invest in a SUV that can accommodate a range
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