The Informed Investor

Episode 11: Do private investments deserve a place in your portfolio? Some investors may see private assets as a tool to boost returns and increase diversification. Research on these questions is ongoing. Private investments tend to comprise illiquid assets that trade infrequently. As a result, their valuations may be difficult to assess, and their returns may behave quite differently than those o...

Episode 10: When you invest, where does the money go? While investors may be comfortable putting their money in vehicles like mutual funds and ETFs, they may be unclear or confused about what happens to their money once it's invested. A fund's structure is governed by law, and the regulatory and legal requirements applicable to mutual funds and exchange-traded funds (ETFs) encourage clearly define...

Episode 9: Enticing pitches for "buffered" strategies promise protection against downside risks in stocks. Are they worth it? Should investors sacrifice some upside for lowering the risks of losing money?   So-called "defined outcome strategies" offer a way to hedge downside equity risk in exchange for lower participation during market upswings.   There is typically a downside protection amount (t...

Episode 8: Is the stock market expensive or a good value? Stock valuation ratios, which measure stock prices against a financial metric like a company's earnings or book value, offer investors some information about the expected returns of the market or individual stocks at any point in time. If a valuation ratio, literally the price divided by the financial metric, is considered elevated relative...

Episode 7: You might say stock market volatility is like a deep-sea fishing trip: Sounds fun until the ride really gets choppy. While the market was relatively calm in recent weeks, that wasn't true in the spring. The S&P 500 Index notched returns of at least +1% or –1% on 12 out of 20 days in March, which was double the frequency of such returns over the past 30 years. Then, in early April, we sa...

Episode 6: When the stock market soars to new highs, does that offer a useful signal for where the market is headed? Should you make a move—or stay in your seat? These questions confound many investors, especially those who may worry that the market is due for a big fall. But investors may be surprised to find out that average returns over one, three, and five years after a new market high are sim...

Episode 5: Interest rates tend to have an impact on everyday life, from savings rates and student loans to credit cards, mortgages, and more. For investors, rate cuts (and hikes) by the US Federal Reserve often prompt the question: How do different interest rate environments affect my portfolio? The Federal Open Market Committee (FOMC) cut interest rates on September 18, 2024, the first of three c...

How do changes in the economy impact stock returns over the short and long term? Whether responding to economic forecasts, consumer price changes, or tariff policy updates, market prices adapt to new information, including changes in gross domestic product (GDP). Luckily for investors, markets are forward-looking and generally react before changes in the economy show up in the macroeconomic data....

US government debt as a percentage of GDP (gross domestic product) reached 121% at the end of 2024. Many investors may have concerns about the impact of this level of debt on the stock market. While government spending associated with debt may provide a stimulatory effect on the economy, the prospect of higher future taxes and long-run impacts on spending and investment introduces many channels th...

Investors may be comfortable with stocks from their home country—but there could be missed opportunities by not venturing across borders. It's important to remember than you're investing in companies, not countries. So ask yourself: Do other nations have good ideas, good processes, and good resources? Investors also may not realize that some familiar brands have ownership elsewhere. We're comforta...

Many investors may choose dividend-paying stocks with the hopes of earning consistent income through payouts that aren't tied directly to a stock's performance. But what are dividends, exactly? A dividend represents a portion of a company's value being distributed to shareholders. However, some investors may not realize that a company's share price typically declines by the amount of the dividend...