February 10, 2018

Reading Room

Planning  |  Investing  |  Book Recommendations  |  DFA

Vanguard’s Principles for Investing Success.  A long but excellent whitepaper which details the 4 most important considerations for investors: Goals, Balance, Cost and Discipline.

The Case for IndexingThis is an excellent whitepaper from the Vanguard Research Group that “explores both the theory underlying index investing and evidence to support its advantages”.

The Case for Indexing II. This is an update (through 2013) demonstrating, once again, that passive funds provide superior expected returns.

Factor-based Investing. Vanguard’s take on Factor Investing.

Alpha or Wealth.  Investors often assume that “beating the market” (alpha) guarantees greater wealth over time.  It doesn’t, as this article by Sam Bass demonstrates.

The Cross-Section of Expected Stock Returns.  This is the seminal research paper on “Three-Factor” Investing written by Nobel Laureate Eugene Fama and Ken French.  A far less technical review of the research can be found here.

Myths & Misconceptions About Indexing.  This is another excellent whitepaper from the folks at Vanguard which addresses 7 common myths about index investing.

Luck versus Skill in Mutual Fund Performance.  This is a highly technical research paper from Ken French and Eugene Fama (Nobel Laureate) that uses bootstrap simulations vs. actual mutual fund performance data to demonstrate that market-beating performance on the part of active managers is largely due to luck rather than extraordinary skill.

How Much is that Guarantee in the Window?  If you’re thinking about buying a variable annuity, please read this whitepaper by David Loeper first.