The Independent Market Observer

The Independent Market Observer

Commonwealth’s chief investment officer, Brad McMillan, provides insight on the economic, market, and political events of the day—both domestically and on a global scale.

Memorial Day Reflections 2018

As we head into the Memorial Day weekend, I would like to take a moment to honor members of the U.S. military for their service and their sacrifice. I wrote the following post in 2015, although the sentiment remains true today.

Posted: May 25, 2018, 5:58 pm

Investing Is Hard

After last week’s posts on how I invest, I have been talking with a number of people, in person and online, about how they approach investing. It has been a very interesting and educational week, and I have come out from it with one conclusion: investing is hard.

Posted: May 24, 2018, 3:05 pm

Indices: Market-Cap Weighting and Beyond

We closed yesterday’s post on passive investing with the observation that while market-capitalization-weighted indices (i.e., stock indices that include stocks based on how much the company is worth) have certain biases baked in, other indices have their own—but different—biases. There really is no perfect solution, and you just have to be aware of the bets you are making. That is what we will talk about today.

Posted: May 23, 2018, 4:59 pm

Different Ways to Be a Passive Investor

After last week’s series about how I invest, a reader raised an excellent point with respect to passive investing. With all of the flows into passive strategies—pushing many stocks higher without regard to their individual merits—is it a safe time to go passive?

Posted: May 22, 2018, 3:47 pm

Monday Update: Growth Rebound Continues

Last week's economic news was all about whether there are signs of a rebound after a weak first quarter. This week will be a slow one, but the releases we will see are important.

Posted: May 21, 2018, 4:50 pm

How I Plan to Invest

After going through my investment thought processes over the past couple of days, today I am going to outline—in general—what I actually plan to do with my excess cash. So, let’s revisit some of the ideas we’ve talked about this week.

Posted: May 18, 2018, 5:50 pm

Appearance on CNBC's Power Lunch, May 17, 2018 [Video]

On Thursday, I appeared on CNBC's Power Lunch to discuss the current state of the market, rising rates, and investor skepticism. Overall, things are good, so how much better can they get? Listen in to learn more.

Posted: May 18, 2018, 1:44 pm

Where Can We Beat the Market?

We closed yesterday’s post on whether markets are efficient with the conclusion that it could be possible to beat the market. But, to do so, we would need either better information or to view things differently—specifically referencing time horizons as one way to do that. Let’s start with a couple of areas where better information is a real possibility. Then, we’ll take a deeper look at the second idea, which is both more subtle and more interesting.

Posted: May 17, 2018, 8:18 pm

Are Markets Efficient?

We closed yesterday’s post on how to invest with the question of whether markets were efficient—and what that would mean for how we invest. A foundational assumption of most investment theories is that markets are efficient, which is to say that all information is reflected in an asset’s price. If this holds true, then it shouldn’t be possible to beat the market because—by definition—everything that could affect prices is already accounted for.

Posted: May 16, 2018, 6:58 pm

Thoughts on How to Invest

Given what I do all day, you might imagine I have this investing thing all figured out. In fact, I probably wrestle with it more than most people. Part of what I do is think about many different types of investments and strategies. With all of those options in my head, it can be hard to make decisions about what is best, for me, at any given time and situation. Right now, for instance, I am in the process of putting what is (for me) a largish amount of cash to work. Do I buy in, despite my concerns about valuations? Do I wait and forgo any interim returns? If I decide to buy in, what should I buy?

Posted: May 15, 2018, 8:22 pm

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