Today's episode of America Talks Money focuses on setting up an effective portfolio that does not involve guesswork in trying to beat the market. The science of investment is improving all the time, so Kate shares four steps that you can take now, towards creating an effective portfolio.
On today's show, Kate and Kelly talk about how you can let the markets work for you. They discuss how, in time gone by stock brokers used to try to beat the market. Today, however, this has been shown to be ineffective. We currently live in an era where people tend to be more panic stricken than hopeful so you could lose a lot of money by trying to guess what the market is going to do. It's really difficult to predict in the short term, because you just don't know what's going to happen. It's important to note however, that regardless of volatility and big spikes, markets do go up over time. There's no reason that this will end, despite what goes on in the news. Science is really the best way to do this. Listen in as Kate explains how it works.
Today, Kate and Kelly discuss:
•That small caps do better over time than large caps- this does not mean that you should only invest in small caps though.
•That the science involves taking the whole market into account.
•How value stocks, over time, do better than growth stocks. Kate explains the science of how this works.
•Risk- and possible ways to manage it.
•That bonds are not going to give you the best returns.
•Balancing risk and return.
•That you should not trade because of what's in the news- news readers aren't there to help you manage your money!
The guest on today's show is Aye Soe, Senior Director of Global Research and Design at S&P Dow Jones Indices. Aye is the main researcher behind the SPIVA Scorecard that S&P releases on a regular basis. These compare and contrast the performance of actively managed funds vs indexes. Listen in and bust up any myths you may have about how good National Brokerages really are for your for your own investment outcome.
Today, Aye talks about:
•What she was looking at in her most recent research and what she was trying to determine.
•Her findings with this research.
•The fees and expenses of active funds- how they make quite a dent in your performance.
•The impact of fees on performance.
•The importance of investors understanding the different layers of the fees they're paying.
•How the under performance of institutional managers does not apply to her firm, S&P Dow Jones Indices.
•That the onus is on the investor to truly understand.
•The vast amount of available information for the self education of investors.
S&P Dow Jones Indices website: www.spindices.com
For the archive of all the past SPIVA and other scorecards related to active vs passive: www.spindices.com/research
Email Aye: firstname.lastname@example.org
Email Kate and Kelly: email@example.com