History shows that even in ‘narrow’ markets, actively managed funds don’t do as well over the long term. Active portfolio managers claim that agile stock picking is the best way to invest. Many have lately argued that simple indexing is a bad strategy in today’s environment because the stock market is dangerously “narrow.” Seven ...

Mutual-fund investors would pay, and the result would be less-efficient allocation of capital. In his State of the Union address last week, President Biden proposed quadrupling the stock buyback tax from 1% to 4% of the value of the stock bought. This proposed increase would have pernicious consequences for efficient capital allocation ...

Though uncertainty lies ahead, the right equities investment strategy can yield portfolio stability. Equity investors have a mounting list of worries. Don’t be fooled by falling oil prices; inflation has proved stubbornly sticky. Healthcare and shelter costs are rising, and core inflation (excluding food and energy) remains high. It appears ...

I bonds, currently paying 7.12%, are a great hedge against inflation. The end of the year is an excellent time to re-evaluate your investment portfolio—especially this year. If you started 2020 with the often recommended ratio of three quarters of your assets in common stocks and one quarter in safe bonds, that’s not the ratio you actually ...

If, say, oil stocks sell at low prices relative to earnings and prospects, those who buy them stand to gain. It’s become fashionable for investors to try to do good at the same time as they do well. Investment in so-called ESG funds—those that take account of environmental, social and governance factors—has doubled in 2020 and now totals ...

Even the best indicators of downturns are unreliable, but investors can take steps to prepare either way. Year-end is the traditional time to forecast the economy and ensure that your investment portfolio can handle future shocks. Habitual worrywarts—including some practitioners of the dismal science—see ominous signs that ...

The skeptics called index funds ‘Bogle’s folly.’ They are now almost 50% of all mutual-fund assets. When I was dean of the Yale Management School, an academic colleague came to me with an unusual request. He was planning a lecture series called “Heroes.” Each month a different person would give a lecture on a heroic figure in one of a variety ...

His plan would hurt investors—but, hey, at least it would pay for free college. In the Democrats’ presidential debate on Sunday, Bernie Sanders repeated his call for a tax on Wall Street. The levy he has proposed, a 50-cent tax on every $100 of stock trades, “will reduce risky and unproductive high-speed trading and other forms of Wall ...

Diversify broadly, control your costs, add some foreign stocks and resist the urge to sell your bonds. How do you invest when everything is expensive? U.S. stocks are selling at more than 25 times their cyclically adjusted earnings. Bond yields are unusually low (the 10-year U.S. Treasury yields about 2.25%), and interest rates are likely to ...

A retreat from economic reform is the prime obstacle to continued Chinese progress. The biggest drop in Chinese stocks in eight years Monday is another sign that Beijing’s efforts to prop up prices have failed. Moreover, the interventions themselves have made China’s equity markets more volatile and damaged their credibility in the ...

If you sold your biotech stock based on the Fed chair’s assessment of the market in July, you’d be sorry now. At a recent International Monetary Fund event in Washington, D.C., Federal Reserve Chair Janet Yellen opined about the “potential dangers” posed by “quite high” stock market valuations. This was not her first market prognostication. ...

Technology is changing the game for small investors. Here’s hoping that regulation doesn’t derail progress. Technology is fundamentally altering the investment landscape, and it may have a profound influence on the quality of service that individual investors receive. This change also is relevant for evaluating the controversy currently ...

With stocks flying high, your portfolio may have become unbalanced, overexposed to equities. The start of the New Year is a good time to examine your investment portfolio in the interest of reducing risk. With rising U.S. stock prices and low volatility over the past two years, your portfolio is likely to be riskier than it should be. The ...

America was plagued by a severe economic downturn in 1920-21. It was cured because the government did absolutely nothing. When the economy goes into a tailspin, the events that created the trouble can suddenly stand out with remarkable clarity. Such clarity is rather more difficult to achieve ahead of time. James Grant, the publisher of ...

Long-run equity returns from today's price levels are likely to be considerably lower than their 10% long-run average. There is a disagreement about the sustainability of current lofty stock market valuations.

One camp argues that the market is dangerously overvalued. The so-called CAPE ratio—the price-earnings multiple for the market based on cyclically adjusted earnings averaged over the past 10 years—stands at over 25, well above its long-run average of about 15. Today's CAPE ...

Faster buying and selling is being blamed unfairly for some problems caused by the fragmentation of markets.

A firestorm of criticism has erupted again against high-frequency trading. It is alleged to give a select group of traders an unfair advantage over the public and even over institutional investors such as mutual funds and pension funds. It has been likened to electronic ...

Index funds have far outperformed the average active manager, and at a far lower cost to the investor. From 1980 to 2006, the U.S. financial services sector grew from 4.9% to 8.3% of GDP. A substantial share of that increase represented increases in asset-management fees.

Excluding index funds (which make market returns available even to small investors at close to zero expense), fees have risen substantially as a percentage of assets managed. In my judgment, investors have received no benefit from this increase in expense ratios. ...

Investors saving for retirement have no reason to fear day-to-day volatility.

The stock market continues to reflect the very modest economic recovery now under way in the United States. From January 2011 through mid-August 2012, the S&P 500 has produced moderate single-digit total returns. But many individual investors are not participating. Some ...

The yields on long-term U.S. Treasury bonds will likely fall below inflation for years. Fortunately, some reasonable alternative strategies exist for investors.

For years, investors have been urged to diversify their investments by including asset classes in their portfolios that may be relatively uncorrelated with the stock market. Over the 2000s, bonds have been an excellent diversifier by performing particularly well when the ...