Some of the following articles are in PDF format and require you to have the Adobe Reader installed on your computer.
How Much Value Can an Advisor Add, According to Vanguard and Morningstar?
- Vanguard: Quantifying Advisor Alpha (up to 3% per year, on average, says this white paper)
- Morningstar: Alpha, Beta…and Now Gamma (up to about 1.6% per year, according to this one)
Articles about Dimensional Fund Advisors (DFA)
- DFA Ranked Top Performing Fund Family by Barron’s/Lipper, February 2011
- A Dying Banker’s Last Instructions – New York Times, November 2010
- Ditching the Monkey – Barron’s, January 2006
- Brain Trust – Bloomberg Wealth Manager, November 2002
- DFA Funds Hard to Find, Easy to Own – CNBC, June 2002
- How the Really Smart Money Invests – Fortune, July 1998
- Interview with Gene Fama – Investment Gurus, February 1997
- Putting Financial Science to Work
Articles about Behavioral Finance
Behavioral Finance is the study of how people make money decisions and the built-in biases we have that make it so difficult to make rational decisions.
- The Intelligent Asset Allocator by William Bernstein, MD: Excellent evidence-based discussion of what matters in investing, with emphasis on constructing a well-balanced portfolio using index funds. As an aside, Bill Bernstein is a practicing neurologist in Oregon AND co-founder of a fee only, institutional-oriented investment management firm.
- The Winner’s Curse: Paradoxes and Anomalies of Economic Life by Richard Thaler: A survey of the relatively new field of behavioral finance, which is the study of why people make the financial decisions they do. Shows that it’s very easy to fall into mental traps that cause bad decision making.
- Fooled by Randomness: The Hidden Role of Chance in Markets and in Life by Nassim Taleb: The message in this fascinating book is that it’s very easy to confuse luck with skill in many arenas, including the financial arena, and doing so can be a very costly mistake.
- Against the Gods: The Remarkable Story of Risk by Peter Bernstein: An interesting (at least I thought so) history of the concept of risk going back to 1500s. Sounds heavy but Bernstein is a remarkable writer and everything he writes is interesting and worthwhile.
- The Intelligent Investor by Benjamin Graham: Ben Graham was Warren Buffet’s early mentor. More than anything else, this book is about applying rationality to making investment decisions.
- Thinking, Fast and Slow by Daniel Kahneman, winner of the 2002 Nobel prize in economics. Another book about behavior finance and the built-in hiccups in our very human thinking processes, especially with respect to money-related issues.
- The Millionaire Next Door by Thomas Stanley: An entertaining book about who are the millionaires in this country. Generally not who most people think.
- The Thin Green Line: Secrets of the Super Wealthy by Paul Sullivan. Good exploration of the difference being being rich (making a lot of money) and wealthy (having a lot of money) and the mindset of the often very different people in each category.
- Being Mortal by Atul Gawande, MD. Gawande, a surgeon at Boston’s Brigham Women’s Hospital, is one of my two favorite authors, the other being finance-oriented writer Michael Lewis. This book is about end of life issues and how we die, which is often not how we want to die. Sobering, poignant, and thought-provoking.
Other Sites to Visit
- The Efficient Frontier: An in depth (and very technical discussion) of topics related to investment management and passive investing. Hosted by Bill Bernstein, a practicing nuerologist who also runs a very large investment management firm (minimum investment: $25 million.)
- IRA Help: Website of New York CPA Ed Slott, one of the most highly regarded IRA experts nationally. Includes a forum with extensive discussion of technical IRA issues.
- Savings Bonds: U.S. Bureau of Debt website with rules and regulations related to all US Savings bonds.
- Bank Rate Monitor: Compilation of information related to bank, CD, and mortgage rates at a local and national level.
- Social Security Website: Includes useful calculators for estimating social security benefits given different scenarios.
- Dinkytown Financial Calculators: Hundreds of quick and easy to use financial calculators — everything from car leases to quick retirement and investment projections.
- Terrance Odean: Website of UC Berkely finance professor, Terrance Odean. His focus, and the focus of the many published papers on his site, is behavioral finance, which is the study of why we make the money decisions we do, even when they are sometimes not the most sensible ones.
- TurboTax Calculators: Several tax-related calculators, including one that let’s you prepare a quick estimate of your annual tax liability.
These links are provided for informational purposes only. The content on these sites has not been verified by, nor are they endorsed by, The Retirement Planning Specialists, LLC.