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4/9/2013 5:17 PMLate in 2012, I reviewed the mid-year 2012 Standard & Poor’s Indices Versus Active scorecard. S&P has since updated the scorecard through year-end 2012, and I wanted to quickly hit on some of its findings. I’ll focus on the five-year results since those are long enough to actually begin drawing mea.... 3/15/2013 11:43 AM
Historically, when compared with comparable maturity Treasury bonds, municipal bond yields have been lower due to their federal tax exemption. Over the very long term, this yield “discount” has averaged about 25-30 percent. An interesting change, though, has occurred from about the start of the financial crisis to today.
Municipal yields have generally been about the same or higher than Treasury yields even before adjusting for tax exemption. The chart.... 2/20/2013 10:13 AM
Numerous studies have documented the counterproductive tendencies of individual investors. These include paying excessive mutual fund fees, holding tax-inefficient portfolios, having improper asset allocations, chasing returns and poorly diversifying portfolios. My colleague Carl Richards has aptly termed this collection of behaviors "The Behavior Gap," since they can greatly reduce the returns that investors could have earned. I firmly believe corre.... 2/6/2013 3:57 PM
I was forwarded an article by Jane Bryant Quinn from 2011 arguing that individual bonds are generally a bad deal. She aptly notes that many bond ladders are inappropriately sold to investors by stock brokers, which I agree with, but many of her conclusions as to why bond ladders are bad are based on faulty assumptions. I’ll selectively cover her com.... 1/29/2013 4:50 PMI won’t pretend that it’s easy to sort through the mountain of available information arguing for or against bond funds relative to individual bonds. From my experience, I would say you should be skeptical of any article claiming that either of the two approaches is always the correct answer regardless of circumstances. In my opinion, a thorough analysis of the two choices yields a much more nuanced answer.
9/25/2012 4:13 PM
Most people within my world understand that diversification across a large number of stocks is vitally important. This means that the most efficient way to take the risks associated with investing in stocks is to mitigate your exposure to any single company. Far less well understood by the public at large and the advisor community is whether it’s generally more efficient to take risk through stocks or through lower quality bonds.
As an example, let’s say I had originally decided to allocate.... 9/19/2012 9:00 AM
This week the Federal Reserve announced a third round of quantitative easing (QE3), which essentially means printing money to buy financial assets. While QE3 has been widely expected, the language in the announcement — stating that asset purchases would continue until the recovery was firmly established — was certainly an unexpected, positive surprise to the market, with the stock market r.... 9/10/2012 9:49 AMI’ve previously mentioned the problems with using yield as an estimate of expected return on bonds that can default. This is namely due to the fact that yield can dramatically overstate expected return, since it doesn’t account for the likelihood of a default or downgrade and the impact that will have on return. It turns out, though, that yield isn’t a particularly great estimate of returns on securities with low risk of default either. Research on high-quality bonds has shown that.... 8/29/2012 9:53 AM7/18/2012 11:11 AM
In my opinion, one of the most interesting aspects of the bond market is that many investors don’t know how some asset classes (such as investment-grade or high-yield corporate bonds) have done compared with Treasury bonds. I’ve found that a good number of investors and most practitioners are well aware of what the long-term performance of stocks have been relative to short-term Treasury bonds, but in most cases they substantially overestimate bond returns compared with Treasury bonds.
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 | Jared Kizer
Director of
Investment Strategy
BAM Advisor Services
(see bio)
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