A Quick Trip Through the Way-Back Machine

Visitors to the Investment section of our website — the new home of the Echoes from the PIT blog — will notice that we’ve added an Archive feature to the right hand sidebar. It includes the archive of all our previous posts, going back to May 2009. By my count there are more than 400 articles collected there, organized by month. I thought I would take a quick trip into the Way-Back Machine (a “Rocky & Bullwinkle Show” reference) to see what we we’ve been writing about over the past few years.

A Mystery Solved: The Case of the Sharpe Ratio

In the December Journal of Financial Planning, Michael Kitces, Sauro Locatelli, and I published a study entitled, “Improving Risk-Adjusted Returns Using Tactical Asset Allocation Strategies.” The title is a mouthful, but we were basically asking if changing the asset allocation of a portfolio can increase your returns relative to the amount of risk that you take, compared to just buying and holding stocks in your portfolio. Around here we call changing the asset allocation “tactical asset allocation.”

The Real Clowns

I was recently quoted in a Diana Britton article in Registered Rep. magazine entitled, “Is Tactical Investing Wall Street’s Next Clown Act?” As you might guess from the unfortunate title, the writer trots out the familiar and tired arguments for buy and hold investing. In a nutshell, you should buy and hold because:

Don’t Try This At Home

When I was a young man, about the time that man discovered fire, it was considered something of a rite of passage to work on your own car. Father and son would pop the hood and pull spark plugs, change the oil, and do other ‘manly’ work on the automobile. My first car happened to be a 1968 Chevy Biscayne. When you opened the hood, there wasn’t a whole lot to see. You could find the plugs, the dip stick, and the windshield washer fluid without any trouble at all. (I still managed to run that car out of oil… twice… because the oil light on the dashboard had a short in it, and I never knew if the light was on because I was actually out of oil or if it was just having a bad day. My father was not pleased.)