WISDOM
“Properly measured, the average actively managed dollar must underperform the average passively managed dollar, net of costs."
William F. Sharpe, Nobel Laureate in Economics, 1990
 
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How to Get Wall Street's Hands Off Your Wallet
A short book authored by Scott D. Reinhardt, CFA. Click the above link to request your free copy.
Patience Pays Off
Looking at market returns is similar to looking at a Seurat painting. Up close (annually) it may seem chaotic and confusing, but when you take a step back (long-term), a clearer picture presents itself.
October 2017, by Jake Asplundh
Building a Passive Portfolio
The mass media of late has given full coverage to the benefits of using low-fee passive investment vehicles – ones that do not try to pick individual positions, but rather represent broad asset classes. The next logical step, building a passive portfolio, is a much more difficult proposition. Which asset classes to choose? Which vehicles to buy? What allocations?
June 2017, by David A. Trossman
The Wisdom of Crowds
Think you or your financial professional can beat the market? What you’re really up against is the actions of millions of investors every day who have access to the very same information you have. Are you or your financial professional smarter than millions of investors? Instead of trying to outsmart the market, PCM’s strategy allows you to reap the benefits that capital markets have provided over time.
November 2016, by Mimi H. Boblitz
Bill of Rights for All Clients
We value our relationships and know that informed clients will be happy clients. As a result, we encourage every client to ask questions until they understand all that they care to know.
April 2015, by Scott D. Reinhardt, CFA
Rebalancing: Rationale and Considerations
One of the most important aspects of the passive investment philosophy is maintaining an appropriate asset allocation throughout all phases of the market cycle. How your assets are allocated across various investments is determined by how much risk you need to take in order to target a certain return and accomplish your goals. There are several ways in which we can rebalance a portfolio and the methods used are influenced by client circumstances, cash availability, tax efficiency, account type, and transaction costs.
April 2015, by Scott D. Reinhardt, CFA
Fiduciary Oath
Unfortunately, not all investment professionals are held to a fiduciary standard. The investment advisor representatives at Passive Capital Management, LLC will serve as a fiduciary on your behalf and we will always provide advice that we believe to be in your best interest.
October 2014, by Passive Capital Management, LLC
Play of the Day: Dividend-Paying Stocks
Investor interest in dividend-paying stocks has increased substantially in recent years, in part because of the implicit stability of the companies in question, but primarily as a potential source of steady income as historically low bond yields have made income from investment-grade bonds difficult to come by. Focusing only on dividend-paying stocks limits an investor’s options to approximately 20% of the total US stock market. With hindsight, we also know that taking this approach 25 years ago would have eliminated some of the best-performing stocks in the period since, including Cisco, Starbucks and many others.
May 2014, by Passive Capital Management, LLC
PCM Charitable
Building a tradition of family philanthropy can be fulfilling and enjoyable. Discussing and setting philanthropic priorities is one of the many ways that parents and grandparents can pass on values to children and grandchildren. The team at Passive Capital Management, LLC is pleased to introduce PCM Charitable, a service for our clients to extend our investment philosophy to their philanthropic assets.
February 2014, by Passive Capital Management, LLC
2012 - Are You Earning Market Returns?
Believe it or not, most investors do not earn market returns due to excessive fees, poor diversification, trying to time the market, excessive taxes or a combination of all of these. A recent study by Dalbar, Inc., a Boston-based research firm, showed that for the 20 year period between 1989 and 2008 the S&P 500 had an annualized return of 8.42% while the average investor earned only 1.87%. That’s a lot of money left on the table.
January 2013, by Mimi H. Boblitz & Scott D. Reinhardt, CFA
Why Passive?
The name of our firm often causes a moment of confusion for those learning about us for the first time. We frequently hear the question "why Passive Capital Management? Wouldn’t I want active management of my precious financial resources?"
November 2012, by Passive Capital Management, LLC
Tools of the Trade
One of the core tenets of passive investing is broad diversification and, in my opinion, this is best achieved by using asset class funds (ACFs) rather than index funds. Asset class funds aim to own every stock within a specific segment of the market such as large companies or emerging market companies. They are not obliged to track any arbitrary index. Managers can wait for favorable trading opportunities rather than being forced to buy or sell because an index dictates. This helps to minimize costs, reduce turnover and broaden diversification.
April 2012, by Mimi H. Boblitz
Ten Questions to Ask the Person Managing Your Money
How do you know if you are paying too much in investment management fees? How do you know if your portfolio is tax-efficient and appropriately diversified? How do you know how well your portfolio is performing? You ask the right questions. Here are ten simple questions to ask the person providing you with investment management services. The answers will help you determine whether you are positioned to have an excellent investment experience over the long term.
September 2011, by Passive Capital Management, LLC
The Bumpy Ride in Equity Investing
Recent days, weeks, months and even the past several years have left many equity investors feeling more than a little seasick.
August 2011, by Passive Capital Management, LLC
All Bonds Are Not Created Equal - Characteristics to Consider
The investment advisor representatives at Passive Capital Management, LLC do not like to make things unnecessarily complex. When evaluating various fixed income alternatives, we believe that high-quality, short-duration, liquid bonds are the best tools to use for a variety of reasons. We believe that bonds should be used to preserve capital and dampen the overall volatility of a portfolio, not to assume additional credit risk in an effort to "chase yield."
August 2010, by Scott D. Reinhardt, CFA
The Way Forward: Independent Advice and Trust
Given what has recently occurred throughout our financial system and economy, there will undoubtedly be significant changes to many aspects of the financial services industry, including regulation, compensation, disclosure and risk assessment. What won’t change is human nature. This wasn’t the first “bursting of a bubble” and it certainly won’t be the last. Nonetheless, it is my opinion that the most recent financial turmoil will accelerate a trend toward a more skeptical and more educated investing public.
October 2009, by Scott D. Reinhardt, CFA
The Comfort of Cash
Many investors have felt the temptation to exit the stock market over the past 12 months and hold cash or cash equivalents. Switching to cash may appear to be a safe strategy but, in reality, you are actually trading one risk for other risks. I believe that risk is best managed by a prudent asset allocation, not by trying to time short-term market movements.
April 2009, by Mimi H. Boblitz
Is It Different This Time? A Brief Historical Review of Market Returns
While every bull and bear market has some unique characteristics, market cycles are an inherent aspect of investing and cycles must be endured if investors want to harness the returns that global capitalism provides over time. We will come upon additional bear markets in the future and we must plan accordingly by controlling those things that can be controlled, such as costs, tax efficiency, asset allocation, diversification (including high-quality bonds) and discipline.
January 2009, by Scott D. Reinhardt, CFA
The Case Against Active Management
Many investors spend a lot of time and money trying to predict the future movements of stocks and mutual funds or they hire people to make predictions on their behalf. Not only is this a costly strategy, it does not increase the odds of enjoying a positive investment experience.
October 2008, by Mimi H. Boblitz
Making the Case for Diversified Real Estate - Risk, Return & Correlations
Diversified real estate funds have historically been effective tools to help lower the overall risk of an equity portfolio. Over the past 30 years the DJ Wilshire REIT Index has had a similar risk/return profile as that of the S&P 500 Index with relatively low correlations to other asset classes.
July 2008, by Scott D. Reinhardt, CFA
The Passive vs Active Debate
Investing is about understanding your long-term goals, structuring a portfolio to help you achieve those goals, and adhering to a prudent investment strategy. Additionally, you do not need to assume manager-selection risk in order to enjoy a successful investment experience.
April 2008, by Scott D. Reinhardt, CFA
The Re-Balancing Act of Investing
Rebalancing is done not necessarily to improve returns but to manage portfolio volatility and maintain a consistent level of risk throughout all phases of the market cycle. A disciplined rebalancing process will prevent emotions (fear and greed) from altering your previously established asset allocation.
April 2008, by Mimi H. Boblitz
Risk Matters
While many investors spend their time evaluating historical and prospective returns, we believe it is even more important to analyze and understand risk. We believe that the capital markets will reward investors over time if they take certain types of risk.
January 2008, by Scott D. Reinhardt, CFA
Making the Case for Fixed Income - Portfolio Volatility and
While some investors are inherently opposed to having any exposure to the fixed income asset class, we believe a strong case can be made that it belongs in all portfolios.
October 2007, by Scott D. Reinhardt, CFA
Illiquid Investments: Returns, Risks & Opportunity Costs
The lag in marking-to-market the value of illiquid investments can overstate underlying values and understate the risk profile of the investment.
October 2007, by Scott D. Reinhardt, CFA
How Investors Relentlessly Underperform the Benchmarks
The primary sources of portfolio erosion include: excessive costs, market timing, tax inefficiency, and inflation.
July 2007, by Scott D. Reinhardt, CFA
The Benefits of Consolidating Assets with One Trusted Advisor
There are important benefits to having your financial assets consolidated with one advisor, especially if that advisor does not accept commissions for simply generating activity in your account.
April 2007, by Scott D. Reinhardt, CFA
Manager Selection Risk & Fortune-Telling
It remains very difficult to separate the skillful manager from the lucky manager and manager selection is a risk for which you may not be compensated.
April 2007, by Scott D. Reinhardt, CFA
The Absolute Return Myth
Many investors are paying phenomenally high fees and taxes for what is really beta, or market, exposure. Alpha remains elusive in the zero-sum (before fees and taxes) game of investing. It also remains very difficult to separate the skillful investor from the lucky investor.
April 2007, by Scott D. Reinhardt, CFA
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