Selected Articles by PIA
These articles have all been authored by principals at Prudent Investor Advisors, LLC. They are understandable and sometimes even humorous.
The Catch-22 of Investment Return (Morningstar, August 2004)
http://www.morningstar.com/advisor/t/54224314/fiduciary-focus-the-catch-22-of-investment-return.htm
Investors should not place too much emphasis on investment returns since they are simply random variables over which they have little control. It makes much more sense to manage a portfolio’s risk and keep costs and taxes low – all of which increase return.
A Counterintuitive Lesson (Morningstar, September 2004)
http://www.morningstar.com/advisor/t/54224315/fiduciary-focus-a-counterintuitive-lesson.htm
Reducing portfolio risk is a more effective way of enhancing wealth than trying to score big in the random game of identifying investment winners through stock picking, market timing or track record investing.
Modern Prudent Fiduciary Investing and Investment Risk (Morningstar, October 2004)
Risk is the central factor at work in financial markets which is why investors should be concerned about the kind of risk in their portfolios. This article describes the difference between rational diversification of risk (i.e., good) and naïve diversification of risk (i.e., bad) as well as the difference between compensated (i.e., good) risk and uncompensated (i.e., bad) risk.
Active vs. Passive Investing (Morningstar, February 2005)
http://www.morningstar.com/advisor/t/54136426/fiduciary-focus-active-vs-passive-investing.htm
This article is an introduction to active investing (i.e., stock picking, track record investing and market timing) and passive investing (i.e., asset class mutual funds and index funds) within the context of modern prudent investing.
Diversifying Risk vs. Stock-Picking (Morningstar, April 2006)
http://www.morningstar.com/advisor/t/42991380/fiduciary-focus-diversifying-risk-vs-stock-picking.htm
A few simple yet fundamental rules of arithmetic governing investment gain and loss demonstrate how reducing the volatility of a series of portfolio returns through broad diversification of risk not only reduce loss but can actually enhance gain.
A Step Beyond ERISA Section 404 (c): Improving on the Participant-Directed 401(k) Investment Model (Journal of Pension Benefits, Summer 2005)
http://www.prudentllc.com/download/JPB-Summer05.pdf
This article proposes an alternative to the participant-directed 401(k) model. The proposal - the non-participant-directed 401(k) plan - helps satisfy two important objectives at once: (1) increase the odds that the retirement investment and saving needs of plan participants will be met and (2) reduce the fiduciary responsibility of plan fiduciaries.
In Indexing We Trust: Passive Investing Appears to be the Standard for Investing and Managing Trust Portfolios (Journal of Indexes, August/September 2004)
http://www.prudentllc.com/download/Simon_2004JournalIndex.pdf
This article takes an in-depth look at the arguments, assumptions and facts relating to the active/passive investment decision.
LINKS TO ALL Articles, Books and Speeches by Principals at Prudent Investor Advisors, LLC
“Fiduciary Focus” columns written for Morningstar since December 2003 by principals at Prudent Investor Advisors, LLC
http://www.morningstar.com/advisor/archive?&bucket=Practice+Management&collection=Fiduciary+Focus
Non-Morningstar articles written by principals at Prudent Investor Advisors, LLC
http://www.prudentllc.com/resources_articles.html
Books written by principals at Prudent Investor Advisors, LLC
http://www.prudentllc.com/resources_books.html
Speeches by principals at Prudent Investor Advisors, LLC