Go Ahead, Spice Up Your Investing Life
- Created on Sunday, 24 August 2014 19:00
“I’m bored.”
You’ve said it. I’ve said it. Your children or nieces or nephews have said it. Our usual response to these two little words is to recommend doing something about it.
You tell children to go outside. You pick up a new book or go to the movies. I head out on my mountain bike. But what if we’ve got it backward? What if boredom helps us make better decisions, particularly money decisions?
Read the rest of the article on The New York Times.
Investors Too Focused On Dividends
- Created on Sunday, 24 August 2014 19:00
Despite the fact that financial theory has long held that dividend policy should be irrelevant to stock returns, one of the biggest trends in recent years has been individual investors rushing to buy dividend-paying stocks.
In some cases, it's a substitute for safer, but lower-yielding bonds. In others, it's because investors believe dividend-paying stocks are simply better investments. For example, the SPDR S&P Dividend ETF (SDY | A-71) now has $12.4 billion in assets under management, and the Vanguard High Dividend Yield ETF (VYM | A-94) has grown to about $8.6 billion.
With this recent popularity in mind, I thought it would be interesting to examine the difference in returns on the stocks within the S&P 500 that pay dividends and the ones that don't.
Read the rest of the article on ETF.com.
Index investing still wins in emerging markets
- Created on Sunday, 24 August 2014 19:00
A regular reader sent me the following email: "If you get the chance, I would appreciate you including a piece about whether the Franklin Templeton Developing Markets (TEDMX) fund adds value. Its manager, Mark Mobius, is always quoted as the guru and pioneer of emerging markets investing. Does he do any better than a passive index fund would do over a 5 or 10 year period?"
Before looking specifically at Mobius' record, it's important to note that an argument often made by advocates of active management is that while indexing, or passive investing is the winning strategy in "efficient" markets -- such as the large-cap stocks of developed countries -- active management is the winning strategy in "inefficient markets." And emerging markets are often considered the poster child for inefficient markets.
Returning to Mobius, let's establish his credentials. He is executive chairman of the Templeton Emerging Markets Group and holds a doctoral degree from MIT. He has been involved in emerging markets for more than 40 years and has received numerous industry awards, including Bloomberg Markets Magazine's "50 Most Influential People" in 2011, "Emerging Markets Equity Manager of the Year 2001" by International Money Marketing, and "Ten Top Money Managers of the 20th Century" in a 1999 Carson Group survey. He is clearly both an intelligent and extremely accomplished individual.
Read the rest of the article on CBS News.