The MSCI Emerging Markets Index has been negative in 13 of the past 28 calendar years while the S&P 500 Index has only been negative 5 of the past 28 years. Which index had a higher rate of return in this 28 year time period? If you’re catching on to the tricky questions we’ve been posing in our last post and the one before that you might guess that, despite the considerably higher...

In our last post, we shared the first in a trio of videos illustrating the important insights we can draw from Dimensional Fund Advisors’ Matrix Book of historical returns. When viewed close up, the data points found in the Matrix Book may look like just an endless array of random numbers. But just as random dots of paint can generate a bigger picture when viewed from a distance, so can individual...

A Fund Isn’t an Index (and Why That Matters) In our last post, we covered how not all indexes are created equally, which means that results may vary, even when they are supposedly tracking the same market. In today’s post, let’s look at how and why a fund’s performance may deviate from its closest benchmark index. Indexes vs. Evidence-Based Funds: Similar But Different Take one more step away from the real-life market,...

Well, speaking of the devil. Or, in this case, the devilish ways that some financial representatives make investment recommendations that may or may not be in your best interest. It depends on whether they are in a fiduciary relationship with you … or not. No sooner had we wrapped our own post explaining why the term may be as important as it is unfamiliar, Dimensional Fund Advisors published its own handy...

Part II: Your Portfolio and Its Parts In our last post, we discussed why it’s best to avoid comparing your own investment returns to “the market” or the latest popular portions of it. There’s one more misleading measurement that can trip up an investor: [message_box title="Your Portfolio" color="gray"] = Pursing the market’s expected returns (by investing in asset classes with higher expected returns but higher volatility) + Managing the risks involved (by investing in asset classes with more...

Part I: Coveting Your Neighbors’ Returns It’s ironic. One of the biggest questions we ask ourselves as investors is: “How am I doing?” While the question is a good one, if the answers are off-base, you risk changing course when you should be sitting tight, or sitting tight when you should be considering a change. This is not only frustrating, it can detract from … how you are doing. It’s a...

One of the reasons I read as much as I do is to be inspired by others. There’s nothing I love more than discovering an intriguing new way to frame an old idea, and then sharing what I’ve learned, hoping to inspire others as well. On the flip side, there’s nothing more demoralizing than falsehoods or opinions being spread as facts. They remind me of a shopping channel infomercial. Watch it...

Still Going Global We’ve said it before and we’ll no doubt say it again. In fact, because it’s so important, we dedicated one of last summer’s Investment Basics Series installments to global diversification, “your super power to help you manage that market risk by spreading it around, widely and globally.” In this year’s markets, the message bears repeating so disparate global returns don’t tempt you to concentrate your holdings too close to home....

To counteract some of the stress that the markets have been putting us through lately, we’d like to share a short, upbeat tale with you about risks and expected rewards. "Once upon a time in 1981, there were two young men in Brooklyn who created a fund management company based on a set of ideas that were “bigger than the firm itself.” Its funds would be new and groundbreaking, but they...