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Ethics or Returns? That Is The Question

Top 5 of the Week of August 1

In the Top 5 this week, we kick off with a look at the cost of being socially responsible with your investments, courtesy of Larry Swedroe, a writer for Michael Batnick, the author of The Irrelevant Investor, shows us why active management—from hedge funds to mutual funds—is struggling. And Chuck Jaffe, a blogger at Market Watch, reminds us that it isn’t Hilary Clinton or Donald Trump that investors have to fear.

Spencer Jakab of Private Wealth shares his learned wisdom from investing legends Irving Kahn, Roy Neuberger, Sir John Templeton, and Benjamin Graham. And Investment News’s Kara Murphy discusses who outperforms in the battle of the sexes when it comes to investing; discover who comes out on top…

Ethics or Returns? That Is The Question


  • More concerned investors are turning to socially responsible investing which has developed to evaluate a company’s environmental, social, and governance performance
  • But studies show that portfolios which contain sin stocks (those aligned with controversial issues) tend to outperform those that sacrifice broader diversification in favor of ethical responsibility
  • Ultimately, therefore, it is a personal decision to weigh up the values behind ethical investing over any financial costs

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More Slices In The Alpha Pie


  • Between Jan 2005 and Jan 2013, 57,512 brand new global funds were started; it is this constant flow of new funds that are affecting the excess asset flow from them
  • The problem is the grass is not always greener—with so many options to choose from it’s difficult to yield anything above average results
  • With all these distractions around, it’s worthwhile to seek financial advisors who can remain blinkered to them; choosing instead to focus and steer their clients towards better returns

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Current Politics; A Refresher Course in Risk


  • With the world watching with baited breath to see who wins the White House, it is surprising to learn that political risk isn’t the dominating factor for investors nervousness
  • Market risk is still investors’ biggest concern; to allay your fears, hold cash as an asset, fund your emergency savings, or check out micro caps or emerging-markets bonds
  • Rather than try and anticipate a Trump or Clinton victory; work out your largest financial fear then play to that specific risk

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Advice From The Investing Greats


  • Irving Kahn: In a financial crisis, ignore noise from the media and buy “beaten-down, high-quality stocks”
  • Roy Neuberger: Buy stocks during a passing negative period
  • Sir John Templeton: Buy when others are “despondently selling” and sell when they’re “greedily buying”
  • Benjamin Graham: Mr. Market can be a volatile partner to do business with, thankfully he takes no offense if you ignore him

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Female Investors Come Out On Top


  • Over a seven year period, studies showed that female investors outperformed males by 2.3%
  • Being naturally risk averse, investing allows women to play to their strengths, and so while they fall behind slightly in an up market they outperform the rest of the time
  • Men tend to be less humble than women; this “overconfidence” is not an asset as much as a danger for investors

Do you agree otherwise? Are you a humble male investor or a risk-seeking female? Share your comments in the section below

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Top 5 of the Week is a summarized collection of financial investment articles that we like and think you might like too. Having written thousands of pages of equity strategy and company research between us, we understand the allure of the ever-changing world of finance. Investing is an art form – and like everything, something you can work on and improve at. There are some excellent writers out there on the finance web, some offer a running commentary on today’s market, some are doing research, some have tips on how to Become a Better Investor, and some just lift the cloud of fog behind a lot of financial jargon. Each week we will keep you up to date with the top 5 articles worthy of your attention.


Anything you would like to discuss about this week’s top 5? Do you have another favorite that isn’t mentioned here? Feel free to add it below. Let’s start a discussion in the comments section!

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DISCLAIMER: This content is for information purposes only. It is not intended to be investment advice. Readers should not consider statements made by the author(s) as formal recommendations and should consult their financial advisor before making any investment decisions. While the information provided is believed to be accurate, it may include errors or inaccuracies. The author(s) cannot be held liable for any actions taken as a result of reading this article. The Babinow Team doesn’t necessarily endorse any stocks or shares mentioned in the articles or the author of such articles linked to and summarized in Top 5 of the Week and cannot guarantee the accuracy of its information.