by Dr. Richard Michaud For the last twenty-five years, the strategic investing mantra has been that long-term asset allocation risk policy is the single most important investment decision.  Risk policy is usually defined as the stock/bond ratio of the asset allocation.[1]  Many large financial intermediaries as well as financial advisors consider asset allocation risk policy a ...

by Dr. David Esch The New Frontier logo is a stylized visualization of a Michaud Efficient Frontier. Composition maps, such as this one, chart the portfolio weights across the frontier, each asset portrayed with a different color on the map. The thickness of each color when the map is sliced vertically represents the portfolio weight of that asset for the efficient portfolio c ...

by Robert Michaud Investors often raise concerns when the stock market is near an all-time high.  I’ve discussed previously why it’s not generally a good idea to sell simply because the market attains a new high, since, if anything, historic evidence points to returns going forward from a market high being superior to average market returns.  But the rising 2017 US stock marke ...

by Dr. Richard Michaud In a recent article, French (2017)1 describes an intriguing property of Markowitz (1959) optimization.  He notes that the Markowitz optimizer (nearly) always populates the efficient frontier with a relatively small subset of the securities in the optimization universe.  Is the optimizer telling us something important about the investment value of the inc ...

by Dr. Richard Michaud It is a common academic mantra, and of many respected investment professionals, that investing in an index fund is best for the majority of investors.  There are two reasons for this view: 1) Experience has shown that active investment strategies charge more and perform less well on average relative to many common index funds; 2) Twentieth century financ ...

An ETF manager is necessarily an active manager of a managed index of ETFs, in a controlled cost effective way.  The choice of ETF indices, the construction of the portfolio of ETFs, and the choice of risk level for meeting objectives, all require investment expertise.  It is the optimality of the portfolio allocations relative to goals that drive the value of an ETF strategy.

by Dr. David Esch Widespread investment wisdom dictates that there are two “irrational” tendencies of human behavior that harm investment performance when acted on excessively: greed and fear. In a simple sense, “greedy” investors want maximum participation in rising markets and “fearful” investors want minimum participation in falling markets. Upside and downside capture stat ...

by Robert Michaud The Dow finally hit 20,000.  I wouldn’t ordinarily put much importance on an arbitrary milestone (see The Dow 20,000...Should We Care?), but the long hover just below this level was extraordinary.  This is not to say that markets need behave in any predictable manner.  Daily movements of the market tend to behave like random walks, and random walks commonly e ...

by Robert Michaud “Dow 20,000” Those two words encapsulate three concepts: 1) the Dow is a relevant economic indicator; 2) 20,000 is a noteworthy milestone; 3) special consideration should be given to investing at all-time highs.  I’ll examine each in turn. The Dow is an imperfect representation of the market. The Dow index is a price average of 30 stocks chosen by committe ...

by Paul Erlich New Frontier Advisors creates and maintains diversified investment solutions for long-term wealth accumulation and preservation. Clients and advisors often raise concerns about individual assets or asset classes held in these portfolios – concerns that are based on looking at the performance, or attempting to assess the potential dangers, of those components i ...