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A Better Way to Think of Cash, Bonds, and Stocks

by: Lawrence Hamtil  on Friday, September 30, 2016

Some have mistakenly contended that stocks have done well as an inflation hedge, but history shows that has not necessarily been the case.  Meb Faber had a good post about the impact inflation has historically had on various kind of investment instruments.  He uses a graphic from the 2012 Credit Suisse Global Investment Returns Yearbook to illustrate the sensitivity of various real returns for various popular investments to inflation.  While stocks have historically offered a healthy real (that is, after inflation) return, they, like other assets that lay claim on future cash flows, have had a negative relationship with inflation: Read More

The Myth of Progress

by: Lawrence Hamtil  on Tuesday, September 20, 2016

"In the sphere of scientific advance it is undeniable that there is progress:  that is to say, each generation builds on the knowledge acquired by its predecessor, and one by one the secrets of the universe are unlocked and exploited.  Of course, there is no reason why this process should go on forever, and it is quite conceivable that one day educational institutions will decline to such a point that the accumulated results of scientific investigation will no longer be passed on...It is a matter of wisdom, not expertise, of an imaginative grasp of the human condition rather than the search for theories with which to explain it." Read More

The Folly of Dumping Fossil Fuels From Your Portfolio

by: Lawrence Hamtil  on Wednesday, September 14, 2016

A few weeks ago, Larry Swedroe wrote an interesting piece on the costs of 'socially responsible investing.'  According to Swedroe, investors who shun stocks or industries for environmental, social, and other reasons are likely to suffer "reduced risk adjusted returns and less efficient diversification."  This warning from Larry seems especially timely given the growing call from many activist groups for pension funds and other institutional investors to dump fossil fuels from their portfolios. Read More