Insights

The American Funds Advantage?

I was forwarded an article that American Funds published touting the superiority of its funds relative to index strategies. The piece contains statements like this: “Some investment managers, American Funds among them, have distinguished themselves with a proven track record of consistently outpacing broad market returns.” And other fabulous statements like this: “Obviously, some are…

Know-Nothing Investors Outperform Know-Somethings

All but the most diehard proponents of the efficient-markets hypothesis accept the fact that with valuable inside information, one can earn abnormal returns. That leaves this question: Does access to information that is publicly available provide investors with a sufficient advantage to outperform appropriate risk-adjusted benchmarks (generate alpha)? In other words, is the quantity and…

In Context Newsletter – Fall 2013

The third quarter certainly had its fair share of stress for investors. As the quarter came to a close, it was clear the federal government would undergo a partial shutdown on October 1. As if that was not enough, the debt ceiling deadline loomed. There was concern the federal government might default on Treasury bond principal and interest payments or other financial commitments if Congress and the White House failed to act before October 17…

The Momentum Effect in the Stock Markets

Jared Kizer is director of investment strategy for the BAM ALLIANCE. In 2008, Jared co-authored the book The Only Guide to Alternative Investments You’ll Ever Need with financial author Larry Swedroe. Jared has written several articles on topics including retirement planning and investment policy.

What You Should Know About Call Options

A call option contract gives the holder the right, but not the obligation, to buy a security at a predetermined price (the strike price) on a specific date (European call) or during a specific period (American call). A call is “in the money” when the current price of the stock is trading above the strike price and “out of the money” when the reverse is true.

In Context Newsletter – Summer 2013

Interest rates have risen significantly in 2013 with the five-year Treasury rate up 0.67 percent through the end of the second quarter. To put this increase in perspective, from the end of 1962 through 2012, there were 17 other years when interest rates increased this much or more over an entire year. The recent increase in interest rates has led to questions about why they have risen so substantially and what the implications are…