FINANCIaL
FIELd NOTES
The Evidence for a Value Tilt
As an investor, you are likely familiar with the concept of owning a balanced portfolio. However, one strategy that has been well-documented over time to outperform a perfectly balanced portfolio is a “value tilt.”
A value tilt approach to investing is a strategy that involves overweighting companies with a lower price-to-earnings (P/E) ratio than the overall market. The rationale behind this strategy is that these undervalued stocks have the potential to deliver higher returns in the long run as the market corrects its mispricing…
Using AARP’s Livability Index to Find Your Retirement Destination
For many retirees, where they live plays a significant role in their overall happiness and well-being. Deciding where to live can be a significant challenge, especially for those that have lived in the same area for most of their working years.
The AARP Livability Index is a useful tool that can help retirees make more informed decisions about where to live during retirement. The Index provides a score out of 100, with 50 being the national average…
10 Facts That Prove the World Is Getting Better
When I open a newspaper or turn on the news, it’s hard to be optimistic about the world. Despite this, I tend to be optimistic, which can come across as a bit naive in the investing world.
As Morgan Housel puts it, “Optimism often sounds like a sales pitch, pessimism sounds like someone trying to help you.” But the opposite has proven true…
Wealth and Happiness are Loosely Connected
Recently I heard a doctor talking about the crisis in Sudan, where intense clashes between military forces have threatened the lives of thousands. He had recently spoken to another doctor in Sudan who was the sole MD in charge of patient care for nearly a million people. Every day, he saw all sorts of medical problems that we would never imagine suffering from here in the US. However, he went on to say that the US and other developed countries suffer from one illness that the Sudanese largely do not: depression.
In recent years, researchers and economists have recognized the limitations of GDP as a measure of progress and have sought other metrics to assess the well-being of citizens. One such metric is the World Happiness Report, which measures the overall happiness of citizens in a country…
Short-Term vs. Long-Term Market Forecasts
I don’t believe in trying to time the market because of the weighty evidence against it. However, I do regularly cite the institutional 10-year market outlooks. I don’t expect these outlooks to be perfect by any means.
Vanguard, one of the sources, often gives ranges of 4-5% per year even on their long-term outlooks. But there is data to support the accuracy of 10-year market outlooks when compared to shorter time frames…
How to Encourage Young Workers to Start Saving
Getting young savers to make the initial commitment to start saving can be difficult. Consider a recent college graduate making $50,000 per year. If they save the recommended 10-15% of their income, that may leave very little for fun spending. The likelihood of them continuing to save decreases if they can't enjoy much of their income, especially during the years with lower income.
If they do give up on savings early, it can be a tough habit to regain, even as their income increases over their career. Because of this, I think it's great to encourage young investors to get started, no matter how small the amount. The power of making a commitment and being able to stick to it is significant…