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Portfolio Solutions Blog

August 29, 2015

Mutual fund rating services divide mutual funds into categories based on their investment style. This helps investors compare the performance of one style to another and helps them compare the performance of individual funds in a particular style. While useful in many ways, this methodology can also create the illusion of superior performance when none exists.  

Among the most familiar investment style tools is the Morningstar Style Box, a nine-square grid that...

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Rick Ferri
August 24, 2015

For as long as I have followed Vanguard Group founder and former CEO John Bogle, he has never embraced investing in foreign stocks. “I wouldn’t invest outside the U.S.” he said during an interview with Carla Fried for Bloomberg Business. “If someone wants to invest 20 percent or less of their portfolio outside the U.S., that’s fine. I wouldn’t do it, but if you want to,...

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Rick Ferri
August 24, 2015

For as long as I have followed Vanguard Group founder and former CEO John Bogle, he has never embraced investing in foreign stocks. “I wouldn’t invest outside the U.S.” he said during an interview with Carla Fried for Bloomberg Business. “If someone wants to invest 20 percent or less of their portfolio outside the U.S., that’s fine. I wouldn’t do it, but if you want to,...

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The Big Apple and the S&P 500
August 17, 2015

The Big Apple is the famous nickname for New York City. It was made popular in the 1920s by John J. Fitz Gerald, a writer for the Morning Telegraph. The name was also popular with jazz musicians in the 1930s and ‘40s who coveted gigs in posh Manhattan nightclubs.

Most people still associate The Big Apple with NYC, but there may be a challenger. The challenger is Apple, Inc. (ticker: AAPL). 

Apple is the most valuable corporation in...

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Rick Ferri
August 10, 2015

Interest rates are going up. The Federal Reserve has essentially said so. They just haven’t said exactly when or by how much. Are you afraid of higher interest rates? If so, what you fear is probably the potential bad side. While they may have a dampening effect, there also are some silver linings to be found.

Most news articles about higher rates focus on the negative aspects: They may corrode the economy and the financial markets, increase mortgage interest payments and other consumer borrowing costs, decrease spending, increase the value...

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Rick Ferri
July 29, 2015

Oh, how painful it has been to learn these lessons.

I’ve been around the investment industry for a long time and have made plenty of mistakes. I’ve also seen a lot of variations on the theme of investing, some of which have made the industry better and others of which seem like nothing more than elaborate ways to separate investors from their money. The growth in low-cost index investing has certainly been a positive. On the other hand, high-cost and low-quality products are still prolific in the marketplace.

The following is my...

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Rick Ferri
July 27, 2015

Harry Markowitz won a Nobel Prize in Economics in 1990 for his work on a theory of portfolio management for individual wealth holders. Since that time, Modern Portfolio Theory (MPT) has become the bedrock for creating best-practice portfolio selection methods. Creating an optimal...

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