The Stock Market is Rigged?
According to bestselling author, Michael Lewis, “the stock market is rigged.” Lewis’ claims likely helped sales of his new book, Flash Boys, but shouldn’t cause long-term investors much despair.
According to bestselling author, Michael Lewis, “the stock market is rigged.” Lewis’ claims likely helped sales of his new book, Flash Boys, but shouldn’t cause long-term investors much despair.
In early February, investors withdrew record amounts from U.S. stock mutual funds, as fears spread over declining global growth, stubborn unemployment, and political and economic troubles in emerging markets. Such turbulence highlights the role safe bonds can play in a portfolio.
The NCAA Basketball “March Madness” Tournament offers plenty of investment parallels. After the entries are submitted and the tournament is completed, a winner is crowned. Does the “winner” have more skill than others – or is it just luck?
In the 1960’s, Professor Eugene Fama of the University of Chicago coined the term “efficient market” to describe a world in which no investor can consistently beat the market without taking greater risk. Today, he’s a Nobel Prize-winner.
Many investors assume actively managed bond funds outperform bond index funds when interest rates rise. On the contrary, the majority of active funds fail to beat their benchmarks in such rate environments.