Mind Over Market

The Department of Labor and the Securities and Exchange Commission will hold a joint one-day hearing June 18 to explore issues that have been raised about target-date funds or life-cycle funds. These are funds that allocate assets into a mix of stocks and bonds based on the age of the investor, with higher equity allocations for younger investors. The poor performance of these funds in the market crash has raised issues about their appropriateness in employer-sponsored retirement saving plans. By Robert Stowe England June 8, 2009 The Department of Labor gave its regulatory blessing to target-date or life-cycle funds in the fall of 2007 at the peak of the market, giving employers the green light to offer these funds to employees who had not made a choice among the investment options in an employer's 401(k) plan. DoL then identified target-date funds as one allowable choice for so-called qualified default investment options (or QDIA's in the lingo of the bureaucrats). For more in...

Q&A with Robert D. Arnott This prominent financial analyst contends that the ‘cult of equities’ has obscured for many the importance of bonds, which can outperform equities for extended periods of time. By Robert Stowe England April 18, 2009 Highlights of Arnott’s Study and the Q&A Below In an article published in the Journal of Indexes , Rob Arnott reports two key findings from his fresh review of the historical performance data comparing returns on stocks with yields on 20-year Treasuries over the very, very long term, from 1803 to February 2009. The article is titled “Bonds: Why Bother?” and is available on line at this link: http://www.indexuniverse.com/publications/journalofindexes/articles/149-may-june-2009/5710-bonds-why-bother.html The first significant finding is that there are long periods during which bonds outperform stocks: namely, 1803-1871, 1929-1949 and the period from 1968 to February 2009. The second notable finding is that while stocks still outperform bonds ...