This post originally appeared last summer. Now, as we close out 2015, I want to revisit whether the theory actually played out.

Predictions of doom and gloom in the financial markets or economy tend to try my patience—unless they are supported by fact—so I’m understandably skeptical of the Shemitah, a prophecy that suggests the potential for a financial crisis every seven years. Imagine my surprise, though, when I looked more deeply into this story and discovered that there is something to the theory of a seven-year cycle in U.S. financial markets.

This post originally appeared in February 2015, but it’s worth a refresher as we start a new year.

Did you know that South Boston is actually to the east and East Boston to the north of the city? And that there’s one local highway where you’re really traveling south but on a northbound route at the same time? I’m not sure who drew up the plans, but I think they might have had a screw loose.

Trying to make sense of mutual fund gains and losses can be equally confusing.

I shared this post last spring, and I think it’s a great reminder to help us keep our expectations in check for the new year.

The recency effect is a well-known cognitive bias in which events that have occurred most recently are given more weight than a longer-term trend. Recency bias poses a problem when it comes to evaluating investment returns—most people will only look at the last year’s returns, disregarding historical trends.

As many of you know, one of the most popular trades for investors in 2015 was a hedging of the U.S. dollar for international exposures—the overriding assumption being that the dollar would continue to increase following a hike in interest rates. 

The reasoning behind this is that higher interest rates, coupled with an expanding economy, should attract foreign capital to the U.S., resulting in a demand for dollars relative to other currencies. Further, an imbalance of supply and demand should result in an increase in the value of the dollar, which would detract from the returns offered by international investments for a domestic investor. The simple solution, therefore, is to hedge all international exposures in an effort to avoid the translation losses from foreign currencies back to the dollar in an environment where the dollar is appreciating.

This post originally appeared last spring in response to questions I had received about my investing approach.

Given what I do for a living, it’s not surprising that I have frequent conversations about investing. I was asked something recently that on the surface seemed like an easy question to answer: What core truths do you know about investing? There are endless factoids, trends, and theories, but what do you believe to be the basic constants?

My colleague Peter Essele, portfolio manager in Commonwealth’s Investment Management group, is the author of today’s post, which was originally published in June 2015. With so much focus on the Federal Reserve and rising rates, it is a good reminder.

Though the media want us to believe that we’re on the verge of a cascading bond market—where rising rates will lead to price declines on bond strategies, which will lead to outflows, followed by more price declines due to forced selling—these fears are somewhat exaggerated.

I shared this post earlier this year, and as we look ahead to a 2016 that could bring ongoing volatility, I think it’s a good reminder.

When we consider market returns, we often focus on average returns, assuming the downside will take care of itself. But I don’t think averages are the best way to express how portfolios may perform. In fact, I think this points to an even bigger problem: how we measure risk.

Today’s post comes from guest contributor Peter Essele, a portfolio manager on Commonwealth’s Preferred Portfolio Services^® Select platform.

Coming out of the financial crisis, one of the darling trades for many investors was the bank loan (i.e., floating-rate) space because of its low duration and supposed ability to withstand a rise in interest rates. The selling point was that the “floating-rate” component of the investment’s yield would offer an increasing payout when rates began to rise. So why are prices declining instead?

I have talked about valuations quite a bit recently, and, as I have noted, they are certainly important. Valuations, however, are largely subjective and change over time; there is little you can do to manage or react to them.

Earnings, however, are objective—the numbers are what they are, come out every quarter, and reflect actual business activity. As such, we need to watch them even more closely.

In yesterday’s post, I reviewed the market data—including valuations, changes in margin debt, and changes in the market cap as a percentage of GDP—for some potential signals of a market crash. All seemed to provide valuable insight but were certainly not definitive. Part of the problem is that these signals can give false alarms or give correct signals that nonetheless result in only minor downturns. So, another set of filters is needed to help refine the analysis.