Dimensional Financial Advisors is a passive-investment-oriented investment firm closely associated with Eugene Fama, 2003 Economics Nobel Laureate and father of the efficient market hypothesis. Today they sent me a link to a very nice presentation by their vice president, Weston Wellington. The presentation, “Is It Different This Time?” runs about 18 minutes long and puts the present stock market gyrations into a historical perspective by reviewing some of the “bear markets” of the last 50 years. It’s not overly jargon-filled and should be pretty accessible. The present market downturn reflects concerns about the non-availability of credit, the extent and …Read More
The financial markets seem to be taking a breather after last week’s roller-coaster rides. We’re all digesting the latest news of short-selling restrictions and a $700 Billion stabilization plan for mortgage-related debt. But now is also a good time to step back and think more broadly.
Ron Lieber, who writes the New York Times “Your Money” column, was a busy man last week, writing columns and recording video clips to help readers understand what was going on. In Saturday’s edition, he wrote a nice article on “Minimizing Your Own Exposure to Risks.” He noted that now is a …Read More
Master Limited Partnerships are complicated investments in which you share in the profits from an income-generating business. Most often these partnerships make their money in energy-related businesses. They’re publicly traded and offer certain income tax benefits. They aren’t for everyone, however.
I wasn’t planning to write about Master Limited Partnerships (MLPs) anytime soon, but I feel compelled to comment on a piece written by Michael Brush on MLPs at msn.com today. Brush is a talented and prolific journalist and I admire his work. However, I think that this article could use a bit more nuance (or maybe he wrote it …Read More
Generally speaking, investments held in brokerage accounts are insured by an agency called the Securities Investor Protection Corporation (SIPC). The SIPC is a quasi-governmental body under the oversight of the SEC. The SIPC is definitely not the brokerage version of the FDIC.
Although the SIPC does not have the regulatory power of the FDIC, it does have one similar function: it insures assets held at all SEC-registered brokerages. When a broker-dealer fails, the SIPC manages the distribution of investors’ assets. If any assets are missing, the SIPC replaces insured securities up to the insurance limits.
There are many kinds …Read More
Today’s post continues Part 1 with a further explanation of this rapidly-growing alternative to the mutual fund. In my initial post I explained that ETFs
- are created by financial institutions in large blocks that can be freely converted into underlying securities
- are transparent, meaning that the underlying securities are publicly disclosed on a continuous basis
- trade continuously on financial exchanges at prices that generally move closely with the underlying securities
- are generally liquid, reflecting the liquidity of the underlying securities
- are usually (but not necessarily) linked to a securities index
- tend to have low management costs
These are generalizations, and …Read More