Are Market Capitalization Weighted Indexes Too Concentrated in the Biggest Stocks?
We’re often asked if the high concentration of a few select companies at the top of the S&P500 is something to worry about. For us, it’s a “no” on three counts…
We’re All HODLRs Now
If you’ve been asking yourself the question: “To BTC, or not to BTC?” the market, in its infinite wisdom, may have just decided for you: we’re all HODLRs now, whether you like it or not.
Elm research wins Bernstein Fabozzi/Jacobs Levy Award
We’re happy to announce that our paper ‘Smart Beta: The Good, the Bad and the Muddy’ has been awarded the Bernstein Fabozzi/Jacobs Levy Award for Outstanding Article!
To Realize, or Not to Realize
Capital Gains Tax and Portfolio Choice
With the US presidential election just a few weeks away, now is definitely a good time to think about capital gains taxes and how things may change.
Back to the Future:
Reviving a 19th Century Perspective on Financial Well-Being
We tend to assess our net worth by the market value of our assets – but it might be more natural to think of it as a stream over time.
Introducing the Elm Partners All-Equity Portfolio For Non-US Investors
Encouraged by our investors, we’re introducing a new fund for Non-US investors: the Elm Partners All Equity Portfolio!
Mind the Gap: Inequality and Diversification
Understanding the origins of wealth inequality is critical in the debate over what, if anything, to do about it. Are investment fees and taxes really to blame, or is there something else at play?
There’s No Place Like Home: The Case For and Against Extreme Home Bias in Equity Investing
Is Home Bias really worth worrying about? Today, we’ll evaluate 10 of the most common arguments heard in support of home bias.
Do US Industry-Sector Weights Explain the Higher Valuation of US vs non-US Equities?
US equities have consistently outperformed non-US equities over the past decade – so, what exactly does this mean for investors?
A Conversation with NYU Professor Aswath Damodaran
Victor sat down with NYU Professor Aswath Damodaran to discuss some of the biggest topics in finance today: from indexing, to factor investing, to why investors ignore momentum.
When it Pays to Pay Capital Gains
One approach for efficient investing is to defer realization of gains while aggressively realizing losses. For investors with a steady stream of short-term capital gains, this can be improved – and in a seemingly counter-intuitive way.
When They Won’t Accept That You Really Don’t Know, Tell Them About Mo
By Victor Haghani and James White Most of us working in the finance industry are used to being regularly called on to predict where different assets are heading. We figure […]
Reflections on the Mega Millions Lottery: Can a Lottery Ticket with Great Odds Still be a Bad Bet?
Last week, financial journalists tackled the lottery jackpot of $1.54 billion. We loved their work, but there was one question left unanswered…
Measuring the Fabric of Felicity
We steer our financial course through life choosing how much to spend and how to invest what’s left. This is the essence of financial planning: an investment policy based on our life, varying opportunities, and preferences.
The Most Important Number Not Printed in the WSJ
When it comes to the long-term return of the equity market, our framework strikes many investors as high (at 5.3% above inflation) compared to the most popular valuation ratio.
A Penny Saved is Two Pennies Earned
Most of us associate the maxim “A penny saved is a penny earned” with Benjamin Franklin, but what he actually said is far more insightful: “A penny saved is two pence clear.”
What Gamblers Can Teach the Buy-and-Hold Crowd
The ongoing attack on stock-picking waged over the past 65 years now has the upper hand – it’s become part of the conventional wisdom that investors should invest primarily in index funds.
New Year, New CEO, New Home
The New Year brings good news: not only does Elm have a new headquarters in the City of Brotherly Love, but we’re proud to announce James White as our new CEO!
Discussions on Risk Parity and the Sharpe Ratio
In our ongoing writing on the topic of investment sizing and portfolio choice, we recently published two articles that discuss the use of Sharpe Ratio in building portfolios.
HHHHHHHHHHHH: Is there a message in there?
The 12-month winning streak of the stock market through the end of October reminded me of a Friday afternoon on the Salomon trading floor…
The Chemistry of 10% More
In a world with two classes of assets – cash and equities – how can investors in aggregate increase their allocation to equities (given that, for every buyer, there has to be a seller) and so cash can’t come into or leave the market?
Some Clarity on Risk Parity
Google “risk parity” and you’ll see a grab bag of conflicting results: articles and posts trying to explain what it means, what effect it might have, how it affects risk, etc.
Elm research wins William F. Sharpe Award 2017
We must have said something insightful, because our coin-flipping research has been awarded the William F. Sharpe award for Institutional Investor Journals Paper of the Year!
How Much Should the Tax Tail Wag the Asset Allocation Dog?
When it seems like equities aren’t what they used to be, it’s natural to consider reducing exposure.
Our Coin Flipping Research in the Journal of Portfolio Management
The research we conducted into how people bet on a computer-generated coin-flip they are told is biased has been published in the Spring 2017 edition of the Journal of Portfolio Management.
What’s Past is NOT Prologue
We recently asked our readers to participate in a coin-flipping experiment, and over 700 responded. In this note, we’ll be diving into the results, exploring what they mean, and what we could possibly learn from them.
What Our Market Return Forecasts Really Mean: Equity Convexity and Investment Sizing
Most think of equities in terms of price, rather than yield – but, as we discuss below, equities do have important convexity properties.
A Sharper Lens for Sizing Up Nickels and Steamrollers
In today’s world, it’s natural that many investors are looking for ways to earn a good return with limited equities exposure. Are the more common strategies working, or is there a better solution?
Podcast: Ignore Investing’s Mathematical Underpinnings at Your Peril
Victor recently joined Joe Weisenthal and Tracy Alloway on Bloomberg’s Odd Lots podcast to discuss mathematics in investing.
Do Index Buyers Make Over-Valued Stocks More Over-Valued?
It’s time to dispel one frequently-voiced myth about indexing: if investors put their money into index funds or ETFs, they’ve unintentionally increased the market’s aggregate mis-valuation.
Lessons from Betting on a Biased Coin: Cool heads and cautionary tales
You’re invited to a financial talk, but when you arrive, you’re offered $25 to bet on the flip of a coin for thirty minutes. How would you play?
Active Index Investing: A contradiction in terms? Victor Haghani on Bloomberg TV
Victor recently appeared on BloombergTV to discuss our blog post, “What’s all the hoopla? Passive indexers are still a rare breed.”
What I learned from my daughter (about investing)
My daughter Jessica, a cognitive science major at university, caught me with a fun brain-teaser courtesy of Professor Phil Tetlock, author of “Expert Political Judgment: How Good Is It?”
How to invest with Elm – Fidelity SMAs vs Fund
We offer US taxable investors a choice: a separately managed account at Fidelity, or the Delaware private Fund. In this note, we’ll discuss the main differences between the two.
If You Want to Own Property, REITs Provide a Huge Head Start vs Direct Investment
If you’ve decided you want to invest in real estate, you may want to compare the merits of REITs versus investing in buildings directly…
The Unexpectedly High Expected Return of Global Equities
It seems just about everyone I talk to these days is underwhelmed by the long-term expected return of the global stock market. I, too, am more worried than usual…but not for the same reason.
We’re often asked why Elm Partners’ US office is in Jackson Hole, Wyoming. Below is a short video shot by my son using his quadcopter a few days ago, all within a few miles of JHHQ – the answer will be obvious after taking a look.
Working Capital Review: A Conversation With Victor Haghani (Audio)
Victor sits down with Chris Riback of Working Capital Review to discuss his career, his thoughts on investing, and how Elm came to be.
How well do global market-cap weighted indexes represent the true “market portfolio”?
The global equity market is a lot like a map: it’s a compromise. It’s system that’s worked for decades, but could we do better?
Revisiting the Expected Return of the Stock Market
We’re taking a moment to address a few lingering questions and comments from our recent short video, ‘The Most Important Number You Won’t Find in the Wall Street Journal’.
ETFs: Better Than Mutual Funds for Long Term Investors too?
We invest with a long-term horizon, and believe that ETFs have three advantages for long-term investors like us: 1) insulation from trading costs, 2) tax efficiency, and 3) cost structure.
Vanguard’s sweeping index changes (adding China A-shares & small caps)
Vanguard announced that it will be changing its approach to both capitalization stocks and the weights of Chinese equities. How will this affect the rest of the industry?