Investing

Alternative Investments

Many investors are less than enthused about the current valuations of traditional investments like stocks and bonds. After a decade-long bull market where the S&P 500 averaged more than 16% per year as of April, stocks are trading at historically high valuations. Bonds are offering very low yields compared to prior decades and the Federal…

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Is cash a thing again?

For many years, clients stopped asking how much they would earn on their money market accounts because for quite a while, money market accounts weren’t paying any interest at all. However, with the Federal Reserve raising interest rates over the past year, our clients can now earn north of 2 percent on their money market…

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Red October

After an extended period of steadily rising markets and low volatility, October was a very bad month for stocks. The S&P 500 fell about 10 percent from the beginning of the month before finishing the month down 7.3 percent. The technology-laden NASDAQ index fell even further before finishing down about 9 percent.   Many investors…

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Has the 60/40 portfolio lost its mojo?

Ever since the start of the huge bull market in the 1980s and 1990s, the 60/40 portfolio was a great way to reduce the volatility in one’s portfolio. The bond portion of the portfolio would spit out 6 to 8 percent yields and, just as importantly, the bonds would tend to rally and yields would…

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Is the market going to do well?

It’s not uncommon for new clients to ask me how I think the market will perform. I guess some people expect their financial advisers to have a unique ability to predict the future. Many advisers will actually offer their opinion about how they believe the stock market will perform in the near future, either because…

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Value investing

Benjamin Graham, who is generally viewed as Warren Buffet’s mentor, has several rules about investing. One of his main rules is to always invest with a margin of safety. In other words, invest in stocks at a price that is low relative to a stock’s earnings and at a price that is less than the…

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Stock markets keep surging

Hopefully you are enjoying your Labor Day weekend with the knowledge that your stock investments have done well so far this year. Through the end of August 2018, the S&P 500 has gained 9 percent and the Russel 2000, which is comprised of smaller companies, is up 13 percent. If you are wondering why the…

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Past performance is no guarantee of future results

There is a universal disclaimer that warns investors not to assume that the recent results of any particular investment will continue into the future. Despite this warning, when contemplating potential investment strategies, investors tend to place excessive weight on recent performance. After all, who wants to invest in a fund that lost 20 percent in…

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Investment portfolios face troubling realities

We have all heard the phrase “past performance is no guarantee of future results.” The average 60/40 stock portfolio has performed quite well since 1982, with an average return of about 10.2 percent1, although the average equity mutual fund investor typically earned less than 4 percent2 during that time, but that’s another story. The last…

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Investor sentiment

Back in 1999, I recall meeting with clients regarding their financial planning. At the time, most people were enjoying stellar returns in their tech-heavy portfolios and they tended to be unrealistically optimistic. When I would suggest the assumptive rate of 10 percent for future planning purposes, they would typically chastise me for proposing such “conservative”…

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