1 fiduciary

   noun               fi·du·cia·ry             \fə-ˈdü-shə-rē, -ˈdyü-, -shē-ˌer-ē\

  1. one often in a position of authority who obligates himself or herself to act on behalf of another (as in managing money or property) and assumes a duty to act in good faith and with care, candor, and loyalty in fulfilling the obligation.

Investing

Market Volatility

Do Mutual Funds Outperform Benchmarks?

Dimensional Fund Advisor's analysis of US-based mutual funds shows that only a small percentage of funds have outperformed industry benchmarks after costs—and among top-ranked funds based on past results, only a small percentage have repeated their success.

 

Recent History Bias

A portfolio’s effectiveness should be judged on the performance of the overall diversified portfolio.  Yet, investors are tempted to focus on the most recent top performing asset class and question their portfolio’s inferior returns.  Even though academia has shown us that past performance does not indicate future results, investors fall into the trap of recency

Too Much Cash

“If a cat sits on a hot stove, that cat won't sit on a hot stove again. That cat won't sit on a cold stove either. That cat just doesn’t like stoves.”

 – Mark Twain

I used this quote after the 2008 stock market crash and think about it often. Not to be Captain Obvious, but Twain was not talking about cats.

Structured CDs: Buyer Beware!

Most investors are familiar with Certificates of Deposit (CDs). You purchase one, and the bank pays you a bit of interest on it, plus your principal back. They don’t yield much, but they’re nearly as dependable as it gets. As such, CDs can often serve as sensible tools for offsetting the risk inherent to pursuing higher expected returns in the stock market.

What If Everyone Were a Passive Investor? (Is the Sky Really Falling?)

For as long as we’ve been in business, we have encouraged investors to adopt a patient, long-term approach to capturing the market’s expected returns. In industry parlance, some have categorized our approach as “passive,” versus active attempts to beat the market. We prefer to think of ourselves as evidence-based.

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1 Source: http://www.merriam-webster.com/dictionary/fiduciary

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