Investment Management For Taxable Private Investors

Jarrod Wilcox, CFA Wilcox Investment Inc. Jeffrey E. Horvitz Moreland Management Company Dan diBartolomeo Northfield Information Services, Inc. Investment Management for Taxable Private Investors (corrected april 2006) Statement of Purpose The Research Foundation of CFA Institute is a not-for-profit organization established to promote the development and dissemination of relevant research for investment practitioners worldwide. The Research Foundation of CFA Institute and the Research Foundation logo are trademarks owned by The Research Foundation of CFA Institute. CFA®, Chartered Financial Analyst®, AIMR-PPS®, and GIPS® are just a few of the trademarks owned by CFA Institute. To view a list of CFA Institute trademarks and a Guide for the Use of CFA Institute Marks, please visit our website at www.cfainstitute.org. © 2006 The Research Foundation of CFA Institute All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the copyright holder. This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is sold with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional service. If legal advice or other expert assistance is required, the services of a competent professional should be sought. ISBN 0-943205-74-3 Printed in the United States of America 19 January 2006 Editorial Staff Elizabeth A. Collins Book Editor David L. Hess Assistant Editor Kara H. Morris Production Manager Lois Carrier Production Specialist Biographies Jarrod Wilcox, CFA, is president of Wilcox Investment Inc. He is the author of Investing by the Numbers and numerous articles in the Journal of Portfolio Management, Financial Analysts Journal, Journal of Wealth Management, and Journal of Investing. His investing experience includes work not only with private investors but also two decades with institutional investors in such roles as portfolio manager, director of research, and chief investment officer. Dr. Wilcox is a former faculty member of MIT’s Sloan School of Management, where he also earned his PhD. Jeffrey E. Horvitz is vice chairman of Moreland Management Company, a singlefamily investment office in operation for almost 20 years that actively invests in both public and private equity. He has published articles in such journals as the Journal of Wealth Management and the Journal of Investing. He has been a speaker at conferences for CFA Institute, the Boston Society of Security Analysts, the Institute for Private Investors, as well as at various financial industry conferences. Previously, Mr. Horvitz was an executive in a family real estate business. Mr. Horvitz holds MA degrees from both the University of Pennsylvania and the University of California at Los Angeles. Dan diBartolomeo is president and founder of Northfield Information Services, Inc., which provides quantitative models of financial markets to nearly 300 investment institutions in 20 countries. He serves on the board of directors of the Chicago Quantitative Alliance and the executive body of the Boston Committee on Foreign Relations. Mr. diBartolomeo’s writings include numerous papers in professional journals and the contribution of chapters in four different investment textbooks. He re