Q4 | Big Year for Small and Value

By Brent Everett

As we discussed in the annual letter, equity performance in 2016 was strong, particularly in US and emerging markets.  Both the US and international bond markets performed well for the year, although all asset classes except US equities suffered losses in Q4.  US equities had an exceptionally good Q4, with the broad US market up 4.21% for the quarter.

Trading Places

The classic ‘80s comedy, Trading Places, seems to enjoy a surge in popularity around Christmas every year. And, almost every year, someone asks me to explain how Billy Ray Valentine (Eddie Murphy) and Lewis Winthorpe III (Dan Aykroyd) made a fortune with frozen concentrated orange juice (FCOJ) futures. It occurs to me that this is a good opportunity to explain how futures contracts and short selling works.

Understanding Cost Basis and Calculating Gains

By Brent Everett

Cost basis is a tax accounting concept — typically the original value of an asset.  It may be adjusted for a variety of reasons, which includes stock splits and return of capital.  The value is used to calculate capital gains.  For unrealized gains, this is the difference between the cost basis and the current market value of the asset.  Unrealized gains are gains that are currently “embedded” in the price of an asset and that represent a potential future tax liability.  For realized gains, this is the difference between the cost basis and the price at which the asset was sold.  Realized capital gains are generally taxable within the tax year that the sale of an asset is made. 

Tips on Protecting Your Data

At Talis Advisors, protecting our clients' information is a priority. In order to assure that all of your data is safe, we want to share tips and best practices in cyber security. These next couple of weeks, we will be posting a tip per day from

The Value of Forecasting Revisited

By Brent Everett

We discussed this subject in a post from September 2015 and, since, we have had several good examples of why we (and the majority of academics, including Nobel Prize winners) believe that forecasting is a waste of time.

Two events stand out: Brexit and the 2016 U.S. presidential election. 

The Fallacy of Intellectual Equivalence

Choosing how to invest is a daunting proposition for most people, and it is made more difficult by the competing points of view heard from various sources. We’ve discussed the importance of considering the source – most have built-in conflicts of interest. The financial media seeks ratings or wants to sell more of their product. Investment managers seek to grow client assets that create income. While imperfect, academic research is probably the least biased and best source of information.

Q3 | Bulls and Bears vs. Donkeys and Elephants

As the third quarter of 2016 progressed, Americans focused on the upcoming presidential election and the financial news media responded with all sorts of predictions about how the stock market might react, with brief time-outs for speculation about interest rates.  With all those distractions, it’s important to note that US, developed international and emerging markets stocks all performed well during Q3.  And, despite fears over rising interest rates, US and non-US bonds also performed well.

Market Returns During Election Years

Discipline is the Key

We frequently hear investors express opinions about capital market performance during election years.  Usually this comes down to them asking should their candidate’s opponent prevail, will markets suffer losses?  Invariably, speculative opinions are reinforced by the musings of financial media talking-heads.  It’s important to know the difference between speculative opinion and facts. 

Institutional Investor’s 2016 Money Masters: David Booth

Dimensional's Philosophy in 35 quotes

In honor of Dimensional Fund Advisors' 35 anniversary, we will be pulling quotes from their 35 Quotations on a Better Way to Invest. These quotes according to Dimensional founder, David Booth, "Document the rich legacy of applying research to practical investing." Dimensional Fund Advisors is an investment firm headquartered in Austin.

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