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Pro #4: An Alternative To “Buy and Hold”

December 20, 2012

“In poker, if you have a bad hand, you ‘fold.’ In investing, the commonly accepted philosophy is to ‘buy and hold,’ even during a bear market.  So which of the two is really gambling - poker or buy-and-hold investing?”

Brenda Wenning

When we first began working together in the summer of 2008, Brenda Wenning of Wenning Investments advised me to sell off my stocks and put my money into cash.  My advisor talked me out of it – and my portfolio still hasn’t fully recovered.

Pro #2: Lower Risk, Higher Reward, Part 2

November 30, 2012

A couple of ex-Fidelity execs created a tool called FundReveal that rates mutual funds based on risk, reward and persistence of performance.  One distinguishing feature of the tool is that the entire universe of mutual funds is shown on a graph, with risk as one axis and return as the other.  Mutual funds in the lower right quadrant have higher risk and lower return than the S&P 500.  Those in the upper left quadrant have lower risk and higher return than the S&P 500.

FundReveal (a former client) has been featured in Investment News, The Mutual Fund Observer, MarketWatch and elsewhere.  Unlike most other rating services, it provides an objective analysis of all mutual funds.

Finding An Angel

November 28, 2012

The economy is weak, capital is scarce and Congress is considering a new tax on angel investing. Money is difficult to come by for almost any business.

Yet entrepreneurs seeking angel funding often believe in their business so strongly, they don't understand why investors aren't lining up to give them money.

Pro #1: Less Risk, More Reward

November 27, 2012

Most investment managers base their practice on modern portfolio theory, which says that greater risk yields greater rewards and that markets are “efficient,” meaning that they self-correct and reflect the true value of stocks, bonds and other securities.

It turns out, though, that modern portfolio theory is in need of an update. An award-winning paper from Mike Hartmann of Plan To Invest Capital Management, Inc. not only disproves modern portfolio theory, it provides a new way to pick mutual funds. Hartmann’s paper, “Short Term Alpha as a Predictor of Future Mutual Fund Performance,” shows that:

  • Less risk may mean more reward
  • The “efficient frontier” isn’t so efficient
  • Short-term alpha is an effective predictor of mutual fund performance

Check out this insightful white paper and let us know what you think of Mike’s findings. Disclosure: Plan To Invest is a client.