Asset

It is natural and tempting to assume that the capital market losses that occurred during the recent financial crisis represent a statistical outlier, a perfect storm, a rare, once in a century event—a black swan. This is not at all the case. An unsettling and eye-opening table in the current issue of the Financial Analysts Journal is reproduced below. The data, provided as part of a guest editorial authored by Laurence B. Siegel, clearly show that large negative returns such as those...

A recent article in the Wall Street Journal discusses the damage that the financial crisis has rendered to the theoretical foundations of modern finance. In particular, modern portfolio theory has come under heavy scrutiny over the past couple of years as a result of its non-relevance as a risk management tool during the financial crisis. This is a highly recommended article that effectively contrasts modern portfolio theory and alternative foundations such as asset liability management and...

In a recent article, Wall Street Journal columnist Jason Zweig discusses estate tax planning strategies that are especially attractive given the current low interest rate environment. Zweig discusses the ability of parents to loan money to children for nine years at a fixed IRS determined interest rate (currently 2.63 percent).

Hedge funds are no longer the exclusive domain of professional and high net worth investors. A recent Business Week article discusses the emergence of exchange traded funds (ETFs) that are designed to track alternative investment indices. A start-up investment management company called IndexIQ has launched five of these types of funds over the past eighteen months.