Author - David John Marotta, CFP®, AIF®

1
To What Benchmark Should I Compare My 2016 Returns?
2
Mailbag: What Do You Think About The Elliott Wave Principle?
3
One Example Of What Is Wrong With Commission Based Investment Advice
4
Using Factor Investing To Boost Country Specific Returns
5
Investing Mistake: Confusing A Promising Company With A Good Investment

To What Benchmark Should I Compare My 2016 Returns?

For most investors, the return of the S&P 500 Index is considered the return of “the stock market.” The S&P 500 index was up 11.96% for the year. But it is best not to think of the return of the S&P 500 as equivalent to the return of stocks. The S&P 500 represents Large-Cap US stocks which is just one half of one asset class. In recent years, the S&P 500 has appreciated more than other stock categories. In other years, the S&P 500 has underperformed those same stock categories.

This year, the S&P 500 underperformed Mid-Cap Value and Small-Cap …

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Mailbag: What Do You Think About The Elliott Wave Principle?

Mailbag: What Do You Think About The Elliott Wave Principle?

A friend of mine swears by using Elliott waves to determine when to get in and out of markets or various sectors or even individual stocks.

His charts show that Elliott Wave Theory has predicted nearly every market correction and he says that while people don’t always apply it properly it can successfully predict everything that is associated with human behavior.

I’ve learned enough to know that Elliott Wave Theory is based on some powerful math and Fibonacci sequences and fractals but I don’t know how to evaluate the claims.

Also, there are dozens of people claiming to use Elliott

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One Example Of What Is Wrong With Commission Based Investment Advice

A recent article entitled “Merrill Lynch FAs Must Refer Clients or Get Pay Cut” showed just one example of what is wrong with commission based investment advice. It opened with this explanation:

Merrill Lynch brokers will now have to refer at least two clients to other units of parent company Bank of America next year if they want to keep the same pay, people familiar with the matter tell the Wall Street Journal.

Advisors who don’t make the quota will lose 1% of their pay, those sources tell the Journal. The referrals can be made to Bank of

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Using Factor Investing To Boost Country Specific Returns

John Blood has a nice article in Investment Advisor magazine entitled “Factor Investing: A Post-Modern Portfolio Theory.”

In a previous article I talked about “Factor Investing: Small and Value Factors.” In this article I would like to highlight another factor, that of “profitability” which is sometimes called “quality” instead.

This latest factor of investing is relatively new, having been “discovered” relatively recently in papers by Robert Novy-Marx (2012) and Fama/French (2015).

Unlike size and value, quality has no universally accepted definition.

The rough idea is that the stock price of companies that are profitable are more …

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Investing Mistake: Confusing A Promising Company With A Good Investment

Harold Evensky has a nice article in the American Association of Independent Investor (AAII) Journal entitled “Conversations on Picking Good Stocks and Funds” which illustrates a common investing mistake: Confusing a promising business with a good investment. Evensky sets the issue up nicely:

David met someone who talked up a technology company we’ll call Super Tech. Super Tech made what David considered to be a revolutionary computer. He bought 10 of their new computers for his office and said that his neighbor just ordered four for his office before we spoke. Seeing the stock go straight up, David

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