Posted by: Michael Zhuang on: December 18, 2010
I turned $300k into $2mm in six month. Here is how I did it.
After the Enron debacle in 2002, Congress passed the Sarbanes-Oxley Act. One obscure clause in the act required company insiders to report their insider trades electronically within a day. The reports would go into a Securities and Exchange Commission (SEC) database accessible to the public (if they knew how to query the database.) Prior to that, company insiders had 15 days to report their insider trades in paper format. Those papers would then sit in an SEC library gathering dust. Periodically, a Wall Street Journal (WSJ) reporter would borrow the pile of papers and write a report on them.
Posted by: Michael Zhuang on: March 11, 2010
Passive money holds the market portfolio. Active money jumps around, but on aggregate it also holds the market portfolio. Before investing costs, the two types of money must have the same returns; after investing costs, such as information acquisition, trading, taxes, etc., active money must earn less than passive money. It is arithmetic.
Though there are hundreds of mutual fund families in the United States, all but two are squarely in the passive camp: Vanguard and DFA.
Vanguard pioneered index investing. DFA pioneered Fama/French factor-based asset-class investing. Vanguard and DFA have the following differences: Read the rest of this entry »
Posted by: Michael Zhuang on: January 28, 2010
Posted by: Michael Zhuang on: January 6, 2010
This Christmas, I had the distinct pleasure of calling several of my clients in retirement and telling them their portfolios are back to their pre-crisis level and their financial freedom is safe and sound.
Their portfolios are variations of the so-called 60/40 portfolio – about 60% in equity-like investments and 40% in bond-like ones.
Many other 60/40 portfolios have been decimated by this crisis. Even with recent gains, they are still far from recovering all their losses. How did I manage to pull even for my clients? There are a few key lessons I’d like to share.
Posted by: Michael Zhuang on: December 14, 2009
In their seminal paper “The Cross-section of Expected Stock Returns,” Fama and French demonstrated that value stocks had outperformed growth stocks in the U.S. markets since 1963 (when CRSP data became available). They called this phenomenon the Value Premium.
Fischer Black, the co-inventor of the Black-Scholes option pricing formula, suggested that the Fama and French results might be specific to the period (from 1963 to 1990) examined. In his opinion, the Value Premium is unlikely to repeat in the future.
