Hot Topics

How to make better investment decisions

October 08, 2017 | Robin Bowerman, Vanguard Investments Australia

We tend to take shortcuts when making numerous decisions in our lives, such as choosing a restaurant or when buying a new car. But don't take shortcuts with investment decisions.

As a recent Vanguard research paper* observes, a common decision-making shortcut is to use a rating system based on the assumption that past performance will continue in the future.

Lessons from the GFC 10 years on

October 08, 2017 | Robin Bowerman, Vanguard Investments Australia

We recently marked 10 years since a little known bank in northern England became a worldwide brand for all the wrong reasons.

A family holiday to Yorkshire in 2007 delivered a front row seat to the unedifying - and chilling - spectacle of long queues of desperate savers lining streets outside branches across northern England. Despite assurances of solvency from the Bank of England it quickly spread to England's first full-on bank run since 1866.

The lottery of stock picking

October 08, 2017 | Robin Bowerman, Vanguard Investments Australia

A just-updated research paper by a US academic reinforces why investors who try to pick future winning stocks and hold narrowly-diversified share portfolios are much more likely to fail than succeed. The odds are against them.

Professor of finance at Arizona State University Hendrick Bessembinder has compared how the almost 26,000 stocks that have appeared on the broad US market between July 1926 to December 2016 have performed during their lifetimes against low-risk, low-return, one-month US Treasury bills.

The simplest way to think about an ETF portfolio

October 08, 2017 | Robin Bowerman, Vanguard Investments Australia

A straightforward way to view exchange-traded funds (ETFs) is as cost-efficient portfolio creators and navigators.

Investors can first determine the shape of their target or strategic asset allocation for their portfolios and then use ETFs to fully or partly create that portfolio and then to keep it on track through disciplined rebalancing.

The digital investor and the 'ostrich effect'

September 18, 2017 | Robin Bowerman, Vanguard Investments Australia

The internet has certainly given investors much more immediate access to information about their portfolios, investment research and investment markets. It has also enabled us to conduct immediate online transactions.

However, the internet, of course, brings positives and negatives for digitally-aware investors. For instance, these investors can more readily overreact to short-term market movements. They can be swayed from their long-time goals by the day-to-day "wall of sound" of online investment/economic/political news and investment commentary.

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