Word: portfolio
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Upon that basis, economists and finance scholars cleared the way in the 1970s for a new approach to investing and risk management that included index funds, risk-weighted portfolio allocation and mathematical models to price options and other derivatives. A lot of this was, as with Fisher's economics, useful. But a basic assumption underlying much of it--that prices were reliable reflections of economic reality--was problematic...
...that does not mean that buying and holding a portfolio composed mostly of stocks--the standard investing advice of the past quarter-century--makes sense for all of us. In the past few years, the mantra of "stocks for the long run" has come under fire from some respected students of financial markets. Their two main critiques have to do with those terms long run and best. The first debate centers on whether you can count on stocks' long-term advantage to work out over your particular investment horizon; the second is about whether an investment as risky as stocks...
...Arnott argues that the evidence does indicate that "the common interpretation that stocks should be the core of your portfolio always" is wrong. "The main message I would want to convey to John and Mary Doe investor is, Pay attention to the price you pay for an asset," he says...
...change in his advice over the past decade has been an increased emphasis on "value" stocks with prices that are low relative to earnings, book value and other fundamental measures. Both Arnott and Siegel are boosters of a new investment approach called fundamental indexing, in which one assembles a portfolio weighted by earnings, dividends or the like in order to avoid the tendency inherent in conventional capitalization-weighted index funds to load up on the most expensive stocks...
When an Israeli cabinet minister proposes that his country impose sanctions on the United States, his government is clearly in a state of distress. Pressure from the Obama Administration to freeze Israeli settlement construction and move toward a two-state peace with the Palestinians has reportedly spurred Minister-without-Portfolio Yossi Peled (who belongs to Prime Minister Benjamin Netanyahu's own Likud party) to recommended that Israel shop outside the U.S. for aircraft and military hardware, sell sensitive technology to clients disapproved of by Washington, and invite America's rivals to play a greater role in the Middle East...