Warren Buffett’s annual shareholder letter – always anxiously awaited by shareholders and others – was published last Saturday. As arguably the greatest stockpicker in history, (Berkshire Hathaway book value has compounded at about 20 percent annually since 1965) why does Mr. Buffett use the letter to recommend that investors take the exact opposite approach via indexing? We can always count…

Byron Wien is a brave man. Every year the Vice Chairman of Blackstone Advisory Partners announces 10 predictions, ranging from domestic policy developments and global power struggles to market and economic performance.  How’d he do in 2013? In a word, awful. By our count, seven of his predictions related directly to investible markets. One of the seven picks – big…

It seems almost self-evident that whoever has the best access to current news sources gains a significant advantage as an investor. Because information is power.  Or is it?  Does news help or hinder investors? Thanks to Bloomberg, CNBC, Reuters, and other financial media, investors have access to an endless stream of stories about bubbles, high valuations, low valuations, what stocks…

Before the great recession, the Oracle of Omaha made a $1 million charity wager that an unassuming Vanguard S&P 500 index fund would outperform a portfolio of handpicked hedge funds over a ten-year timeframe. Six years in, who’s leading and who’s leaking oil? Without knowing it, Warren Buffett and the leaders of hedge firm Protégé Partners picked a great time…

Average is above average The evidence is overwhelming. Index funds, designed to deliver the market return of an asset class, have consistently outperformed the majority of actively managed mutual funds. Period. Still, many investors and advisors are unwilling to accept this idea. Indexes seem “average.” Average seems lame. And who wants to be lame? It’s a costly attitude. A word…

What happens when 1,500 people get together to talk about ETFs? Four days of keynote speeches, panels, and booth presentations… and here’s what I witnessed: It’s Early Days Matt Hougan (CEO ETF.com) and Dave Nadig (CIO ETF.com) opened the conference calling for ETF assets to reach $15.5 trillion in 10 years, up from $2.3 trillion right now. That would eclipse…

More than $2.3 trillion is invested in index exchange traded funds. Where is it? How is it allocated worldwide? Our own local State Street Global Advisors publishes a fascinating monthly report that tells all.  Global ETF Allocation: By Asset Class: Largest Providers: The Big Three It’s early days Yes, $2.3 trillion is a lot of money. But it’s only a…

If you had more money to invest, would you get better investment results?  It’s tempting to think so, and you might be intrigued about the research on exactly that question.  3 top professors did the study, and here’s what they found. Steady there, Eddie… Let’s jump to the study’s conclusion.  No, the rich are not smarter investors.  They make the…

What’s it like starting from zero and operating a small investment boutique, competing against the giants of Wall Street?  Challenging yes, but far from impossible. As Malcom Gladwell describes in David and Goliath, a guidebook for newcomers, underdogs and entrepreneurs, there are real advantages in being small. Gladwell’s David and Goliath “uncovers the hidden rules that shape the balance between the…