Ho Ho Horrible Holiday Investing Myths

(This blog was originally published in 2014.)
 
Instead of sitting back with a glass of egg nog and overdosing on Rankin/Bass holiday specials, some investors spend year-end trying to decorate their portfolios with dubious investment ideas. Here are three holiday follies that are even nuttier and harder to digest than fruitcake.
 
Santa Claus Rally
Yes Virginia, there may be a Santa Claus, but don’t count on a Santa Claus Rally — a small upward blip in stock prices that sometimes occurs between Christmas and New Year’s. Explanations for the rally, which was “discovered” in 1972, include bears and other pessimists giving in to the holiday spirit, year-end tax planning, even investors spending Christmas bonuses. Continue reading

The Last Redoubt of Active Management—Down Markets?

Blog_Sad_BearSo there I am, at a recent Loring Ward Conference during a break. We’d just wrapped up a presentation on Asset Class Investing that includes a number of slides on the challenges active managers have in consistently and predictably outperforming the market. Continue reading

Ho Ho Horrible Holiday Investing Myths

Instead of sitting back with a glass of egg nog and overdosing on Rankin/Bass holiday specials, some investors spend year-end trying to decorate their portfolios with dubious investment ideas. Here are four holiday follies that are even nuttier and harder to digest than fruitcake.

 

Santa Claus Rally
Yes Virginia, there may be a Santa Claus, but don’t count on a Santa Claus Rally — a small upward blip in stock prices that sometimes occurs between Christmas and New Year’s. Explanations for the rally, which was “discovered” in 1972, include bears and other pessimists giving in to the holiday spirit, year-end tax planning, even investors spending Christmas bonuses. Continue reading

Oops! Here We Go Again

When will investors (and many financial advisors) learn the potential perils of chasing returns?
 
Take a look at the chart below showing flows into bond funds from 2009 through 2012. Billions of dollars poured in, year after year.
 
Equity and Bond Flows 2004 – 2013
 
blog8
 
Meanwhile, despite five-in-a-row positive years for U.S. equity markets, investors fled stocks until the bond market turned sour in 2013, with a 15.1% decline in 30-Year U.S. Treasuries.
Continue reading