Are TIPS Cheap?

I’ve been getting lots of questions about whether Treasury inflation-protected securities (TIPS) are a good investment, with the yield at just 0.32% on the five-year. To answer the question of whether TIPS are cheap or expensive relative to Treasuries, I’ll discuss how to make the determination of whether to purchase TIPS or nominal fixed-income securities. To begin, we need to recognize there are two ways one can hold TIPS and nominal bonds: purchase the bonds individually or invest in mutual funds/exchange traded funds (ETFs). When investing through taxable accounts and IRAs, one can do either. However, in corporate > SEE MORE

Financial Perspectives from a High School Senior

In an educational system that teaches students a seemingly endless amount of knowledge in their mathematics or history courses, they often leave out the pivotal financial realities their students will encounter in the coming years. High school and college students can acknowledge their own lack of experience with financial affairs but must be well-versed and educated in these areas during their youth in order to fill this void.

The more crucial areas that young adults will experience > SEE MORE

Tom Geoghegan

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Tom Geoghegan

Founder and Private Wealth Advisor
Beacon Hill Private Wealth

RIP Book Value?

If you’re familiar with factor investing, you’re likely aware that value investing, particularly in the U.S. market, has had a challenging stretch over the last 10 years. If you dig deeper into the darker recesses of factor investing nerdery, you’ll also find that the validity of book value — one of the traditional measures of quantitative value — as a measure of a company’s intrinsic value is under assault. The basic claim is that intangible assets (research and development expenses, brand name, intellectual capital, etc.) have become such a large fraction of intrinsic value for many companies that book value, which doesn’t generally account for intangible > SEE MORE

Emerging Markets Need Time

The April 26, 2019 column by John Rekenthaler, vice president of research at Morningstar, called the experiment of investing in emerging markets a failure. He drew this conclusion after presenting the following evidence.

He began by showing the correlation between the Vanguard Emerging Markets Stock Index (VEIEX) and the S&P 500 Index over the last 25 years was a fairly low 0.25, demonstrating that, “On paper, emerging-markets stock funds did do some zigging while U.S. equities zagged.”

However, he then noted that it was “useless diversification. The only two times during the GREAT BULL MARKET (the results warrant the capitalization) in which U.S. equity investors needed protection was the New Era technology-stock meltdown and, of course, 2008. Emerging-markets stocks dropped 25% during the first instance—better than the S&P > SEE MORE