When a private company decides to offer equity ownership shares to the public, this is called an Initial Public Offering, or IPO. It is an exciting time for the company and its original private shareholders. The public often gets excited too, especially when it’s a well-known company.

In their 1991 paper, Investor Diversification and International Equity Markets, Ken French and James Poterba documented investors’ preference for owning stocks from their home country, commonly known as home country bias. They found investors preferred domestic stocks because they expected higher returns in their own equity market compared to other countries’ markets.

Today’s Common Sense Investing post might be more important than anything I have ever covered. In all of my posts and videos, I tell you things that spring from one of the landmark ideas in financial economics: capital market efficiency. As fundamental as market efficiency is to good financial decision-making, it is poorly understood by most investors.

One of the most common perceptions about investing is that it is risky. This is easy to state, but harder to defend when you get into the details. To decide whether or not investing is risky, we first need to think about what “risk” is. Depending on what you are investing in – and what you are investing for – there are different ways to think about and measure risk.

It has been more than a decade since the last U.S. recession. Prior to that, the longest gap between recessions was exactly a decade.

Most of the arguments from dividend lovers boil down to being able to successfully select individual stocks. This is not something most people can do consistently. Even in a supposed stock-picking environment, there is no reason to believe that dividends, or the growth of dividends, would be an indication of a good stock to own.

A lot of people are worried about how index funds might affect the integrity of the stock market. They’ve been fretting about this for years. At the extreme, some have even compared index funds to the collateralized debt obligations that sent the global financial market into crisis in 2008.

If you decide to add REITs to an existing portfolio of index funds, we are really talking about adding real estate in excess of its market-cap weights, as described above. If REITs really are a distinct asset class, generating distinct returns, there may be some logic to overweighting them. But before you go all in, let’s unpack that assumption.

In an efficient market, asset prices reflect the present value of future profits, discounted at some discount rate. The discount rate used to value a company is exceptionally important to investors: it is the return that the investor expects to earn.

Before you invest every dollar you have in this popular index – or leave every dollar there if you’re already in it – let’s review the reasons why building and maintaining a globally diversified portfolio probably makes more sense over the long-run.

In investing and in life, we know we can’t always control the outcomes that occur from the decisions we make. Bad things can happen to the wisest among us. Likewise, even a fool can get lucky.

If you’ve got a fair amount of common sense – and you must, if you’re following my Common Sense Investing series – you probably already know that perfection is hard to find. In other words, in the search for solid answers to life’s greatest questions, you’ll usually find a lot more shades of gray, than pure-black or all-white.

Fees are important to investors. In most cases, lower fees increase the likelihood of a positive long-term investment outcome. Index funds globally have seen enormous growth in the past decade. That growth (and the competition to capture it) have resulted in fees literally going to zero on some index funds.

Since well before my time in the financial services industry PWL Capital has been one of the strongest advocates for improving the experience of Canadian investors. Not only has the firm been an advocate, we have been leading by example.

Let me preface this post by saying that I have nothing against social responsibility or having social responsibility reflected in an investment portfolio.

If you go to any online community related to money you will find people talking about their desire to learn about investing by researching and selecting individual stocks. They understand that this is risky, they will say, but they will only try it out with money that they can afford to lose.

Everyone likes to believe they’re smart consumers. That’s probably why the term “smart beta,” also known as “factor investing,” is so hot right now. “Stupid beta” probably wouldn’t attract many takers. 

So what is factor investing, and are you smart to use it? That’s what today’s post and related video are all about

The fixed income component of the Dimensional Fund Advisors global portfolios has been low to-date in 2018, and also for the past 12 months. It is down 0.51% year-to-date at July 2018, and down 0.27% for the 12 months ending July 2018.

We may have just witnessed the longest bull market in US market history. There is some disagreement on the definition of a bull market, but no matter how it is defined it is clear that the S&P 500 has been rising without too much interruption for a long time. When the market is rising, it tends to hit levels that have never before been seen.