Category Archives: Asset Allocation
European stocks are underperforming U.S. stocks by about a factor of two since last June despite the hype in financial media last year and a falling U.S. dollar. Below are performance charts and a brief discussion of what went wrong.
Here is a vindication of EMH as far as longer-term investing based on Dow Jones data since 1915. Statistics indicate that diversification has placebo effect on investors and it is not an effective remedy against market swings due to its … Continue reading
There is no free lunch in portfolio allocation as any scheme that reduces the impact of adverse market conditions also adversely affects returns in bull markets. Most advisers and clients know this but in hindsight there is always backlash.
Hedge funds and CTAs have struggled in recent years due to rapid decline in the supply of dumb money. When the current transition period ends and new strategies are fully deployed, only those who are prepared for the coming war … Continue reading
Despite the outperformance year-to-date, which may be related to U.S. dollar weakness for the most part, international stocks have consistently underperformed U.S. stocks in the last 22 years. Unless there is a well-documented paradigm change, a switch to those markets … Continue reading