Getting Started

Model Risk

When you hire an investment adviser, your financial information and objectives will likely be fed into one or more models that provide asset allocation recommendations and indicate the risk and return parameters associated with each. In all probability, the adviser will then allocate your investments according to the model’s dictates. You shouldn’t go along with this without pausing for thought, because the assurance such models provide us is delusory. This isn’t just a problem of “garbage in, garbage out”–although I’ll come back to that in a minute. Because the models are mechanistic, they can’t properly reflect markets that evolve organically. […]

Keeping Score

Don’t simply look at your account statements to see if you have more or less money in your investment accounts than you did last quarter or last year. Take the time to set up a proper scorecard so that you’re getting the feedback you need about your investment choices to determine whether these are adding value or not. Otherwise you’ll probably end up incurring significant opportunity costs that will leave you considerably poorer than you would have been if you’d kept score properly. A proper scorecard enables you to keep track of how you’re doing in multiple ways. Twenty years […]

Should you hire an investment adviser?

According to a recent article in the Financial Times publication Fundfire, “Boston Celtics guard Jason Terry is suing a number of money management firms and individuals claiming their risky investments and misappropriation of funds cost him $2.4 million.” Sad stories like this are all too common and raise two crucial questions for anyone who has accumulated savings of $250,000 or more. 1.Should you go it alone or hire an investment adviser? 2. If you decide to hire an investment adviser, how can you ensure you don’t end up in the same pickle as Jason Terry? Should you hire an investment adviser? In […]