Category Archives: Asset Allocation

Advice on Organizing Asset Allocations and Managers

I was reading an occasional blast email from my friend Tom Brakke, when he mentioned a free publication from Redington, a UK asset management firm that employs actuaries, among others. I was very impressed with what I read in the 32-page publication, and highly recommend it to those who select investment managers or create asset […]

Living in the Land of Worries, Part 1

There is always a reason to worry, and always enough time to panic. Look over there, behind that bush: interest rates are rising. In Europe and China, deflation is threatening. The geopolitical situation is in many ways tense over Russia and Middle East issues. Japan is a mess. Emerging markets will get hit when the […]

Learning from the Past, Part 2

Happy New Year to all of my readers. May 2015 be an enriching year for you in all ways, not just money. This is a series on learning about investing, using my past mistakes as grist for the mill.  I have had my share of mistakes, as you will see.  The real question is whether […]

On Financial Risk Statements, Part 1

Most formal statements on financial risk are useless to their users. Why? They are written in a language that average people and many regulators don’t speak. They often don’t define what they are trying to avoid in any significant way. They don’t give the time horizon(s) associated with their assessments. They don’t consider the second-order […]

Problems in Simulating Investment Returns

Simulating hypothetical future investment returns can be important for investors trying to make decisions regarding the riskiness of various investing strategies.  The trouble is that it is difficult to do right, and I rarely see it done right.  Here are some of the trouble spots: 1) You need to get the correlations right across assets. […]

Numerator vs Denominator

Every now and then, a piece of good news gets announced, and then something puzzling happens.  Example: the GDP report comes out stronger than expected, and the stock market falls.  People scratch their heads and say, “Huh?” A friend of mine who I haven’t heard from in a while, Howard Simons, astutely would comment something […]

The Art of Extracting Large Commissions From Investors

The dirty truth is that some investments in this life are sold, and not bought.  The prime reason for this is that many people are not willing to learn enough to save and invest on their own.  Instead, they rely on others to corral them and say, “You ought to be saving and investing.  Hey, […]

The Victors Write the History Books, Even in Finance

    “It ain’t what you don’t know that hurts you, it’s what you know that ain’t so.” (Attributed to Mark Twain, Will Rogers, Satchel Paige, Charles Farrar Browne, Josh Billings, and a number of others) A lot of what passes for investment knowledge is history-dependent, and may not serve us well in the future.  Further, a certain […]