The Sapient Investor

Here are some tips for how to get the best results in your 401k, along with links to many helpful resources.

For the past couple of weeks, the prices of beaten-up value stocks (particularly financials, energy, and cyclicals) have been bouncing up well ahead of the former leaders, growth stocks (particularly technology). Is the “value effect” back? We look at the evidence.

The Fed is pulling out all the stops to provide ample liquidity. Stocks have responded. That is likely to continue.

Negative retail investor psychology has crushed the prices of closed-end funds. They are trading at unusually large discounts to NAV (net asset value). It’s an historic opportunity worth exploiting.

It’s tempting to let emotions influence your investment decisions. There is a lot of panicking going on right now. It’s times like these that allow those with sound investment disciplines to flourish.

The Fed funds futures market is indicating that a rate cut may lie ahead. In the past, this has been a very positive indicator for stocks.

It’s difficult to find real-world assets that do a good job of diversifying basic stock and bond risks and still provide an attractive level of return. Global macro funds seem to offer at least the potential to fit the bill. This article graphically illustrates the potential benefit of adding a global macro fund to a typical 60/40 stock/bond portfolio: an ending wealth level that is 33% higher after 20 years with no increase in risk (volatility).

The “quality” factor is one of the most common among the various “smart beta” factors popular today. This factor is very well-documented in the literature, and its long-term performance has been quite strong. Our research on tactical timing of factor exposures indicates that quality is likely to add considerably more return than average in the near term. Our favorite way to gain exposure to quality is through Invesco S&P 500 Quality ETF (SPHQ).

Two international small cap ETFs have had their expected returns rise to the top of our 500-ETF universe: one focused on Europe and the other on Japan. We consider the long-term case for international small cap and then dig into why we believe now is the time to buy these two ETFs.

Taxes are usually a bigger drag on returns than expenses, though they are less visible and get less attention. How many of these 7 common mistakes are you making?