New Here? Get the Free Newsletter

Oblivious Investor offers a free newsletter providing tips on low-maintenance investing, tax planning, and retirement planning. Join over 21,000 email subscribers:

Articles are published Monday and Friday. You can unsubscribe at any time.

Investing Blog Roundup: Analyzing the CARES Act

I hope you have managed to stay healthy so far.

In the world of financial planning this week, the two biggest pieces of news are of course an enormous number of new unemployment claims and the new bailout package (the CARES Act). Jeffrey Levine has done an excellent job providing a brief overview of the various financial planning provisions of the CARES Act:

Other Recommended Reading

As always, thank you for reading.

Investing Blog Roundup: Staying Healthy

Most of us have had our worlds dramatically restricted over the last couple of weeks. Meanwhile we’re inundated with news all day long — most of it bad. As much as physical health must be a priority right now, so too with mental health.

Other Recommended Reading

Thanks for reading!

Investing Blog Roundup: All-Stock Portfolios Are Safer??

This week I enjoyed a recent article in which Allan Roth digs into a surprising set of Monte Carlo results from Fisher Investments, in which all-stock portfolios were shown to be safer than diversified stock/bond portfolios. A good reminder that you need to know what assumptions went into a given set of simulations (or into a given piece of research in general) before you know whether or not you can trust it.

Other Recommended Reading

Thanks for reading!

Investing Blog Roundup: Is Your Investment Plan Reasonable?

One of the messages I’ve tried to deliver over and over on this blog is that there’s no perfect portfolio, but there are countless perfectly fine portfolios.

Jim Dahle recently shared a similar message, with some guidance on how to tell if your portfolio is in fact perfectly fine.

“I often tell people to choose a reasonable asset allocation (written investing plan) and stick with it. In this regard, the investor matters far more than the investments. Of course, that requires that the investing plan first be REASONABLE. Those of us who have been doing this for a long time can tell at a glance whether a plan is reasonable or not.”

Other Recommended Reading

Thanks for reading!

Investing Blog Roundup: Fama French Value Premium Update

Eugene Fama and Kenneth French recently released a new paper looking at the value premium (i.e., the additional returns earned by stocks with high book-to-market ratios — “value” stocks — relative to the overall stock market).

The point of the paper was to determine whether the expected value premium declined or disappeared after the publication of their initial papers on the topic in 1992 and 1993.

That is, the value premium has been quite a bit lower since the publication of their papers. But there’s a question of whether that was because:

  1. The expected premium has declined/disappeared, or
  2. The expected premium is still there, but the random nature of the stock market happened to result in a lower premium (in much the same way that stocks have an expected risk premium relative to bonds, but over any particular period they may not actually earn more).

Their conclusion:

“The high volatility of monthly value premiums clouds inferences about whether the declines in average premiums reflect changes in expected premiums. Comparing the first and second half-period averages, we don’t come close to rejecting the hypothesis that out-of-sample expected premiums are the same as in-sample expected premiums. But the imprecision of the estimates implies that we also can’t reject a wide range of lower values for second half expected premiums.”

In other words, “we don’t really know.” The value premium is sufficiently volatile that we can’t say conclusively whether the expected value premium has declined or not.

Other Recommended Reading

Thanks for reading!

Investing Blog Roundup: Is Vanguard’s “At Cost” Model Even Good Enough?

Vanguard’s claim to fame is that it runs everything “at cost” because of its ownership structure (i.e., no external shareholders demanding a profit). And the benefit to Vanguard clients has been tremendous over the years.

In a recent article for Financial Planning, Allan Roth pointed out that Schwab is now basically able to run their entire asset management business below cost — offering what many would see as superior service, while charging fees as low or lower than Vanguard’s.

The key point is that Schwab simply has a different business model (most especially, a key other revenue source), so they are able to use their asset management business as a loss leader, whereas Vanguard must break even on theirs.

Other Recommended Reading

Thanks for reading!

Disclaimer: By using this site, you explicitly agree to its Terms of Use and agree not to hold Simple Subjects, LLC or any of its members liable in any way for damages arising from decisions you make based on the information made available on this site. I am not a financial or investment advisor, and the information on this site is for informational and entertainment purposes only and does not constitute financial advice.

Copyright 2020 Simple Subjects, LLC - All rights reserved. To be clear: This means that, aside from small quotations, the material on this site may not be republished elsewhere without my express permission. Terms of Use and Privacy Policy

My new Social Security calculator: Open Social Security