Investments

Rebalancing means selling what has done well and buying what has done poorly, not visa versa.

My grandfather Donald Mortlock worked on Wall Street during and after the 1929 crash. The firm he worked for was a “market maker,” a company which helped to literally “make a market” in several stocks.

To meet your goals you don’t need to beat the investment returns of everyone else. Instead, you want a decent return in order to retire comfortably and to ensure a cash flow which will support your standard of living.

2005 was a year which showed the weakness of limiting your asset allocation to US stocks and US bonds.

You can smooth your returns without any of hedge fund’s drawbacks.

Wanting to avoid regulations, Hedge funds appeal to investor’s snobbery to make it seem like a privilege.

You take all the risk, but the manager gets twenty percent of any winnings. This is not a good compensation scheme.

Hedge claims are equivalent to “All of the coins I want to tell you about came up heads.”

As Hedge funds grow in popularity, beware of following the lemmings.

ETFs combine tax efficiency with low expenses.

If the S&P were a financial advisor it would say, “Let’s buy mostly large cap growth stocks in the industry that did well last year with a high price per earnings ratio.”

If you have a large portfolio, hire a professional manager.

Diversify your business and your investments. That way fads and trends won’t determine your financial success.

Adapting and reacting to trends is important in investing and crucial in small business.

I will give you the forecast for the next TEN years in the US Markets: Up, Down, Up, Up, Down, Up, Down, Up, Up, Up. These predictions are not in chronological order.

Inflation ultimately has to rise and keep pace with increases in the money supply.

It is usually better to be a seller of options than a buyer of options.

Today, we have 8,269 mutual funds. About one-third of all common stocks are held in mutual funds.

If you rely on a commission-based financial product salesperson, you will probably be sold the wrong kind of funds.

Congress contributed greatly to the bubble through the distorted incentives created by the tax code.

The Stock Market will Drop Further.

The market is very “pricey” when old-fashioned measures of stock market valuation are examined.

When (not if) the Federal Reserve Board increases interest rates, this will bring the stock-market party to an end as higher interest will cause both stocks and bonds to fall in value.

Periodically, investors should review their portfolios with a view toward rebalancing the assets.