For the decade from 2004-2013, the momentum premium—as measured by the Fama-French momentum factor—experienced a negative compound return of -1.2 percent per year. (This number was calculated using the monthly momentum premium figures from the Fama-French data series. Note that returns on factors are generally expressed as annual averages, not annualized returns, and during this decade the annual average premium was 1.8 percentage points.)
This decade-long period of poor performance has led many investors to ask whether the momentum premium has now permanently disappeared, because it’s become so well known and so many are now trying to exploit it.
While we cannot know the answer to the question of whether momentum has indeed disappeared for good (only time will provide the answer), we can look at the historical evidence to see if there have been other decade-long episodes of negative premiums. That might provide insight into whether the most recent period was truly unusual.
Read the rest of the article on ETF.com.
Much of what is written about retirement planning focuses on investing. I am guilty of contributing to the volume of that literature. My book, “The Smartest Retirement Book You’ll Ever Read,” discusses how to invest intelligently so that you can retire with dignity. I certainly don’t mean to trivialize the importance of careful financial planning. Without such a plan, including goals, benchmarks and careful tracking, it’s unlikely you will be able to maintain your quality of life in retirement, assuming you’ll be able to retire at all.
But in doing the research for my latest book, “The Smartest Sales Book You’ll Ever Read,” I was struck by the level of unhappiness in the United States. Considerable research indicates those who focus entirely on achieving financial success have a lower sense of self-worth and more health issues than those who place a premium on activities that give them pleasure or develop a skill.
Read the rest of the article at US News.
The financial media continues to stoke anxiety and fear -- and trading -- with "news" about a coming market correction. On its list of "must reads" for July 16, Yahoo Finance featured these articles:
"Investors haven't been this optimistic since 1987. Here's why that's bad."
"This could be a big problem for stocks."
Sometimes these predictions are right, and sometimes they are wrong. When they are wrong, investors who rely on them for market advice suffer the financial consequences. On January 25, 2013, CTA and risk management firm Genuine Trading Solutions Ltd. predicted a major stock market correction over the coming year for the Dow Jones, S&P 500 and NASDAQ indices. Genuine Trading described itself as "a derivatives specialist in risk management hedging" for corporations and financial institutions.
On January 25, 2013, the Dow Jones Industrial Average (DJIA) closed at 13,895. It closed at 17,060 on July 15, 2014.
Read the rest of the article at The Huffington Post.