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How Useful is Historical Data in Predicting Future Returns? - Retirement Researcher
Effectively all of our understanding of finance and investing is based, at least to some degree, on historical returns. But how good of a guide is the past? Is it actually different this time? We’ve already talked about the limitations of models in how we understand investing, and how we use statistics to analyze what’s […]
What is the Role of Bonds in Your Portfolio? - Retirement Researcher
A lot of the time, investors view each of their investments in isolation. They focus on how this fund or that fund did. But this is a fundamentally wrong headed approach. Just like your investment portfolio only really matters – and can only be evaluated – in the context of your overall retirement plan, you […]
What is the Efficient Market Hypothesis? And What Does it Mean for You? - Retirement Researcher
Navigating the financial markets can often feel like you’re in a labyrinth, with news outlets, analysts, and every ‘guru’ on the internet vying for your attention, each one painting a picture of the market landscape teeming with endless opportunities for extraordinary gains (or horrific losses). But there’s an easy way for investors (whether you’re focused […]
Choosing Between Individual Bonds and Bond Funds in Your Investment Portfolio - Retirement Researcher
When investors are looking at their bonds, one of the most common questions is whether they should use individual bonds or bond funds (either in the form of mutual funds or ETFs) in their investment portfolio. Interest rates have come up over the past few years, so the yields on bonds have also come up. […]
Home Sweet Home Bias: Overweighting US Stocks in Your Portfolio - Retirement Researcher
Investing is deceptively simple. Until it’s not. As investors, we want to start with the market portfolio—that is, by definition, the most efficient portfolio. But we’ll also want to customize our investments to address our specific situation. For instance, the global bond market is substantially bigger than the global stock market, but most retirement-focused investors’ […]
Occam's - Do the Midterm Elections Matter to the Market? - Retirement Researcher
The 2022 midterm elections are coming up (remember to vote on November 8th). With every election, there’s always a lot of talk about how important it is to vote (true), and that if the other side wins it means the end of the world (potentially less true). There are always important issues at play, and…
Reverse Engineering To Desired Retirement Time Horizons - Retirement Researcher
This article is part of a series; click here to read Part 1. Using the portfolio return and volatility assumptions determined in Exhibit 1.1, we then reverse engineer fixed return assumptions and sustainable spending levels for a desired retirement time horizon and targeted probability of success. The investment portfolio is modeled using 100,000 Monte Carlo…
Occam's - How Are You Different From the Average Investor? - Retirement Researcher
WHAT IS OCCAM’S RAZOR?Occam’s Razor is a principle attributed to William Occam, a 14th century philosopher. He stressed that explanations must not be multiplied beyond what is necessary. Thus, Occam’s Razor is a term used to “shave off” or dismiss superfluous explanations for a given event. This concept is largely ignored within the investment management landscape. This newsletter will…