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Portfolio Solutions Blog

February 13, 2015

Time plays an integral part in your investment strategy. Markets can act very differently over the course of one year compared to 10 years. Over the short term, they are typically volatile. Meanwhile, over the long term – say, more than 5 years – markets exhibit behaviors that allow you to choose an investment strategy based on expected performance.

You could say this distinction between short-term and long-term...

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Rick Ferri
February 06, 2015

Peter Bernstein wrote The 60/40 Solution in 2002. His seminal article laid out arguments for why 60% stocks and 40% bonds is the “ideal asset allocation” for long-term investors. He considered this allocation the “center of gravity” on a risk and return spectrum.

Bernstein’s observation is timeless advice for many investors, but not everyone. The 60/40 mix is a solid starting point for a discussion about asset allocation for investors who are accumulating assets for...

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January 29, 2015

Are you ready for some football?

This weekend the New England Patriots and the Seattle Seahawks square off in Super Bowl XLIX. While just about every major television network and news publication has analyzed all the X’s and O’s, we break down the big game from the investor’s perspective.

Here are six investment lessons you can learn from the Super Bowl: 

Correctly picking outcomes is more luck than...

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January 22, 2015

A common financial goal is to help pay for a child’s college tuition. Many families find 529 plans as a smart and tax-efficient way to finance future higher education expenses. These college savings plans were created by Congress under Section 529 of the Internal Revenue Service, from which they got their name.

Almost all states and the District of Columbia sponsor 529 plans that feature their own investment options and benefits. In most plans, you can contribute to a 529 plan in any state. However, since 529 plans vary, as do each individual’s circumstances, you should do your...

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January 20, 2015

The end of December through early January in the financial industry is forecasting season – the time of year when market “experts” tell the media how they believe markets will perform over the next 12 months.

Unfortunately, most of what is said is more hype than substance. In fact, the majority of market forecasters are proven wrong.

CXO Advisory Group, a market research firm, studied 6,582 forecasts made by 68 experts about the U.S. stock market from 2005 through 2012. It found that the aggregate accuracy of...

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January 15, 2015

 “The investor’s chief problem – and even his worst enemy – is likely to be himself.” – Benjamin Graham, The Intelligent Investor

Finding a sensible investment strategy isn’t that difficult, but executing it over the long term is. You may expect the randomness of market returns to likely be the biggest challenge to successful investing, but it’s not. It’s you.

You are a living, breathing investment risk comprised of innate behavioral biases. It’s okay,...

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January 13, 2015

Here is a market prediction for 2015: investing will be a zero-sum game. Okay, that isn’t much of a prediction because the concept of markets as zero-sum is not new and it applies at all times. Still, understanding this concept can help you make better investment decisions in the new year and beyond.

Essentially, investing is a zero-sum game in that a particular market is made up of the holdings of all investors in that market. Therefore, if one investor outperforms, then another investor must underperform. You can think of it like a poker tournament – for a player to win a hand,...

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