The 60/40 portfolio, rooted in Modern Portfolio Theory, balances equities and bonds to optimize returns relative to risk, but its effectiveness declines during high inflation. Rising stock-bond ...

Correlation analysis in portfolio management design is overrated. There isn’t much benefit derived from relying on low correlation among asset classes to achieve excess return. The best way to use ...

Investors understand intuitively that some stocks are riskier than others. The capital asset pricing model attempts to quantify the common perception of risk using a term called beta. By understanding ...

A figure showing correlations between salinity in the Gulf of Mexico and rainfall on the continents in the modern era and the Little Ice Age. The colors represent rainfall (green is wetter conditions, ...

In our recent article on the flaws in return on equity, we showed how it has no correlation with several different measures of valuation. However, there is one valuation metric, price-to-book (“P/B”), ...