By Irene Aldridge Several decades back, managing investment risk was straightforward by today’s standards. A simple strategy of “don’t put all your eggs into the same basket” worked well: invest into many stocks with different businesses, the thinking went, and reap the rewards of positive returns in all market conditions. The key underlying premises of “multiple baskets” investing were two-fold: Stocks of companies in different industries rarely moved in tandem; and Most stocks were expected to rise in the long term. Today, neither of the two principles holds: Many companies and their stocks face an uncertain future, and lots of stocks sway together in responseRead More →

By Irene Aldridge Adapted from The Quant Investor’s Almanac 2011: A Roadmap for Investing (Wiley) by Irene Aldridge and Steven Krawciw Exchange-traded funds (ETFs) have garnered quite a bit of attention lately. Some have fingered ETFs as the cause of the May 6, 2010 crash of the U.S. equity markets; others find that ETFs are displacing conventional securities, defeating the original purpose of the stock markets: to help businesses raise capital from investors. Yet, ETFs remain widely popular: many institutional and individual investors alike hold one or several ETFs for both long and short periods of time. The latest research, however, shows that ETFs areRead More →