Other Areas of Investment Theory

The investing pyramid

For some, investing is a hobby. That's right, some folks enjoy visiting financial Websites daily, watching financial news—they even subscribe to financial newsletters and attend financial conferences.

For most, however, investing isn't a hobby. It's drudgery. It's overwhelming. And it's impossible to imagine how to squeeze it in one's busy life.

The investing pyramid is a framework that non-hobbyists can use to frame the investing process. If you have a finite amount of time to devote to (or a finite interest in) your investment activities, this can help guide the way.

What goes where: the art of asset location

"Don't let the tail wag the dog."

That well-worn expression applies to so many things in life—including investing. Specifically, you'll hear some investing "experts" say that you shouldn't let taxes drive your investment decisions. Others, meanwhile, will argue the exact opposite.

Factor investing

Most investors have heard of factor investing, but just may not know it. If you've ever favored smaller companies to larger companies, you've engaged in factor investing.

Behavioral pitfalls

Psychological factors—such as the tendency to feel particularly risk-averse following a bear market or a proclivity to follow the crowd—can play enormous roles in our investment outcomes, and often they are not positive ones.

What is the right foreign allocation?

U.S.-based investors keep hearing that it's a small world, and they should therefore globalize their portfolios in an effort to maximize their return opportunity. But how should investors decide how much foreign exposure is too much and how much is not enough?