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Blog | The Portfolio Doctor

The Portfolio Doctor

My blog provides valuable insights into Nobel Prize-winning financial strategies for investors. By utilizing decades of worldwide peer-reviewed capital markets research and analysis, I demonstrate how to build better investment portfolios with lower risks. I also examine common financial media misinformation and how investors can make better financial decisions.

Talking About Death with Someone Who is Dying

To speak with your loved ones about death when it isn’t imminent is crucial, to speak with them when it is, is critical. Though difficult, finding a way to have these conversations can help you find solace and closure in their absence and closer to them while they are still here. 

Research shows that those who have discussions about death with those in our lives who know that they are dying – and if those conversations come from a place of honesty and openness – you become closer to those you love who you may be losing as well as feel more hopeful about the future.[i]

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The Impact of Inflation

When the prices of goods and services increase over time, consumers can buy fewer of them with every dollar they have saved.

This erosion of the real purchasing power of wealth is called inflation. Inflation is an important element of investing. In many cases, the reason for saving today is to support future spending. Therefore, keeping pace with inflation is a crucial goal for many investors. To help understand inflation’s impact on purchasing power, consider the following illustration of the effects of inflation over time. In 1916, nine cents would buy a quart of milk. Fifty years later, nine cents would only buy a small glass of milk. And more than 100 years later, nine cents would only buy about seven tablespoons of milk. How can investors potentially prevent this loss of purchasing power from inflation over time?

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Indexing Fuss Unwarranted

Passive investing has been ridiculed by Wall Street for decades. The following list is just a small sample of the criticisms I’ve collected over the years:

  • Sanford C. Bernstein & Co. strategist Inigo Fraser-Jenkins called it worse than Marxism.
  • David Smith, fund manager at Hargreaves Lansdown, called passive investors parasites on the financial system.
  • Tim O’Neill, global co-head of Goldman Sachs’ investment management division, warned investors that if passive investing gets too big, the market won't function.

The common theme is that indexing (and passive investing in general) has become such a force that the market’s price discovery function is no longer working properly. Goldman Sachs’ O’Neill has even called passive investing a “potential bubble machine.”

Given the number of questions I get from investors about this issue, one would think that passive investing is now dominating markets. Let’s see if there’s any truth to such beliefs, and whether there’s anything to worry about.

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Tim Bock Featured on Investopedia: How to Raise Financially Savvy Children

Good financial decision making starts in childhood and follows you through adolescence, college and into your adult life. Parents who teach their children the fundamentals of money management, budgeting and making prudent financial choices are providing them with a sound financial foundation.

However, teaching money skills early in life can often fall by the wayside because it is not exactly exciting. The disadvantage to this is that by the time kids are starting to make their own financial choices, they have not been given the tools to avoid mistakes and weigh their options responsibly. One of the most impactful ways to encourage informed financial decisions is to lead by example.

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10 Big Tax Mistakes That Can Lead to an Audit

The chart below demonstrates a sharp decline in the number of audits since 2010. The IRS audits only 0.5% of all returns as of 2017. That being said, that is still nearly 1 million taxpayers that may face the dreaded audit this coming tax year With that in mind, here is a list of red flags that may draw the attention of the IRS to examining your tax return.

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Dimensional Fund Advisors Named Most Recommended Asset Manager by Advisor Perspectives’ Advisors Choice™ Awards

When it comes to choosing to work with asset managers on behalf of our clients there is no shortage of options. There is Schwab, AQR, American Funds, Vanguard, BlackRock and the list goes on. We have, for a long time, chosen Dimensional Fund Advisors as our primary asset manager for the funds we choose for our clients. The philosophy that they use is evidence-based investing. The choices that they make are backed by decades of research from Nobel Laureates and financial science. To us, this approach to investing just makes logical sense.

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Is Your Investing Strategy Really a Strategy?

SPECULATION, RISK, AND A LONG-TERM PLAN FOR BUYING AND SELLING SECURITIES

Many people are hesitant to invest heavily in the stock market because they consider it similar to gambling or taking too much of a risk with their hard-earned money. With volatility on the rise in our current climate, more investors are pausing to consider the risk they are taking with their investments and whether they should be so bold.

The idea of losing more than they can afford to in advance of their retirement weighs heavier on them than the possibility of capitalizing on the money they invest. Sadly, this type of behavioral bias--fear and herd mentality--can do more harm than good.

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How Evidence-Based Indexing Works

The strategy uses common sense, data, and financial science to boost performance.

In the hallowed halls of academia, noted professors at the top business schools are teaching entire semesters on the benefits of investment strategies using passive indexes instead actively managed mutual funds or picking stocks.

As of 2017, more than $4.5 trillion has flowed into passive index funds and exchange-traded funds. What is passive investing, why are trillions of dollars flowing to this strategy, and more importantly is there a better way to invest?

To fully understand passive investing, it is helpful to understand active investing. Here investment managers (or investors doing it on their own) try to outperform the overall stock market or a specific part of the market using strategies such as fundamental and technical stock picking or market timing.

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