A central tenet of our investment philosophy is diversification. Furthermore, we advocate for “real diversification”, which means owning thousands of stocks in companies of all sizes (large and small), geography (U.S. and non-US) and investment style (value and growth). This type of diversification represents the only “free-lunch” there is in investing. But real diversification also…
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In 1906, statistician Francis Galton attended a livestock fair where villagers were invited to guess the weight of an ox. No villager successfully guessed the correct weight, but Galton noticed that the average of all the guesses was 1,197 pounds — the exact weight of the ox. A famous experiment asked 56 students to guess…
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In Part 1 of this series, a brief list of the advantages and disadvantages of investing in publicly traded equities vs. direct real estate was provided. In this article, I will try to more directly answer the question, “which is better, stocks or real estate”? First of all, that is probably the wrong question to…
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Some investors choose to invest their savings in stocks while other others favor investing in directly real estate. Below is a brief list of the advantages and disadvantages of each. Advantages of Directly Owned Real Estate Leverage: The primary advantage of real estate is the ability to use leverage. Leverage is an investment strategy where…
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As I discussed in a previous article, Dimensional and Vanguard are similar but are different in some key respects. While neither fund family relies on forecasting or individual security analysis, Vanguard funds are index funds while Dimensional funds are not. Both fund families are great options for investors. However, Dimensional provides several advantages that may…
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Vanguard and Dimensional Fund Advisors (Dimensional) both offer mutual funds that provide investors with broad exposure to various asset classes at a very low cost. However, there are important differences between the two fund families. But first, let’s start with a bit of history… Vanguard introduced the Vanguard 500 fund in 1975, becoming one of…
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I had a discussion with someone about the recent stock market decline and he observed that despite the drop in stock prices, corporations seemed to be healthy and were still making lots of profits. He then said: “That’s what I don’t get. How can the market go down so far and so fast, when nothing…
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Interest rates and bonds prices are inversely related; when interest rates rise, the value of a bond falls. Given that rates on US Treasury Bonds have climbed to levels we have not seen since 2011, bond prices are down year to date. As of November 1, 2018, the YTD returns on the Vanguard Total Bond…
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Most of us have heard of asset allocation – the process of dividing a portfolio’s assets across various parts of the market according to an investment plan that takes into account an investors goals and risk tolerance. Asset location, on the other hand, is a tax minimization strategy that takes into account how different…
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One of the major changes that were made to the tax code by the Tax Cuts and Jobs Act of 2017 was the expansion of the Standard Deduction to $12,000 for individuals and $24,000 for married couples. This means that going forward, many more taxpayers will be taking the standard deduction rather than itemizing.
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