Investments are at the core of what we do, and here is some commentary on various aspects of the financial markets.
I found it very interesting that Bogle directs much of his criticism at the mutual fund industry and even Vanguard itself. Bogle argues that fund companies should be doing a better job challenging the excesses of executives and corporate managers.
This week’s carnival is concerned with investments, investing styles, and how to stay focused. There are just about as many investing philosophies as there are investors, so read a range of opinions and form your own.
Four reasons not to abandon a brilliant allocation that includes emerging markets simply because of short term fluctuations.
MarketWatch is seeking a top-notch writer who will bring a fresh perspective on money to the world’s investors. We believe that fresh perspective ought to include the idea of freedom investing.
Sometimes the medium term trend seems to weigh more heavily in our minds than the long or short term trends.
In the Wealth Management Carnival, we share 7 Interesting Articles from other sources. From advice to diversify investments to index fund criteria to choosing a bank, this month we found seven articles that discussed various investing ideas.
The entire selling point of the immediate fixed annuity is a lower return in exchange for a guarantee. But when analyzed, the purchase price is a loss from which you can never recover.
“Real estate investment trusts should be much more than an optional selection in a balanced investment portfolio.”
“A growing link between municipal bond and U.S. stock performance could be very bad if equities fail to rise robustly over the next few years.”
Direct ownership of gold has become more popular, despite some lingering fear that the government could again ban private gold ownership. With ongoing concerns about the global financial system and gold hitting a record high, many people are interested in this “safe haven.”
Generally speaking, financial complexity is a curtain behind which the finance industry can extract its fee. When the curtain is pulled back, convertible bonds fail to add value for four specific reasons.
In another edition of “you can make the numbers say whatever you want” two financial industry studies are contradicting each other.
Sector rotation would suggest that we are still at the beginning of a market recovery. This is probably the bottom of energy stocks.
Portfolio construction begins with the most basic allocation between investments that offer a greater chance of appreciation (stocks) and those that provide portfolio stability (bonds). There is no such thing as a safe investment that pays market rates of return.
Emerging market bonds are an attractive way to get a higher yield, but historically they have come with higher volatility and a high incidence of default. But that has been changing.
David John Marotta was interview on radio 1070 WINA’s Schilling Show discussing why you shouldn’t hold gold or cash, how governments can destabalize economies, and what investments you should hold instead.
Huge financial incentives motivate a newly minted public stock to attempt to keep their best foot forward just long enough for the early investors to maximize their profits.
I was on the radio today and someone called in claiming that Vanguard Emerging Market ETF (VWO) had done nothing but go down in value.
Precious metals will, on average, just keep up with inflation, but your after tax return would mean you fell behind inflation by the 28% tax you must pay.
When growth is relatively cheap it should outperform value.
Currently large is relatively cheap and small cap is relatively expensive. For that reason, the R1000 or S&P 500 should outperform the R2000 small cap.
A low P/E 10 bodes well for the next 20 years of investing, whereas a higher P/E 10 suggests a lower expected return.
The Shiller P/E ratio is computed by taking the current price and dividing by the average inflation-adjusted earnings from the previous 10 years.
The highest peak for the regular P/E was 123 in the first quarter of 2009. It was much higher than the historical mean of 15, yet it was the best time in recent history to buy stocks.
What we would really like to measure are the changes in price (P) that cause a company with a good long-term track record to look relatively cheap. Economist Robert Shiller created just such a measurement.
The Marotta allocation method is a proportionally weighted allocation based on the square of each Sharpe ratio. Squaring the Sharpe ratio drastically reduces asset categories in proportion to their distance from the efficient frontier.
Q: Do you recommend dividend-paying stocks? If not, what investment strategy do you recommend for retirees like me who are seeking income from our portfolios?
Crafting portfolio asset allocations is a combination of art and engineering. Just as a blending of colors can produce cerulean, so a blending of indexes produces a unique shade of risk and return.
Dividend investors are too easily lulled into the temporary comforts of portfolio income.
Starting in 2013, pending further legislation, the capital gains tax will go up to 20%.
The efficient frontier measures all investments on a scale of risk and return. Risk is commonly placed on the x-axis, and return is placed on the y-axis.
Buffett estimates that he has a 60% chance of winning. This is in line with statistics suggesting that low cost funds beat high cost funds more than half the time.
The qualified dividend tax rate is currently at a maximum of 15%, as are capital gains. Starting January 1, 2013, dividend tax rates will go up to the investor’s ordinary income rate.
A stock’s valuation is measured on a continuum from “value” to “growth” In broad strokes, value stocks are cheap and growth stocks are expensive.
The second factor of investing is size as measured by a stock’s total capitalization. Over time small cap will outperform large cap even after factoring out measurements of volatility.
Modeling investment returns seeks to find an equation to predict your expected returns as much as possible. The simplest equation for the markets would be “Return equals 11.71%.” This has been the average return from 1927 through 2010, the zero factor model.
Once you buy this product, you’re stuck. All structured settlement transfers must take place through a court order…
Now at year end, I will review how freedom investing fared in 2011 and in the decade since 2002.
I had a dream in which I saw a map similar to the one above and I heard myself explaining why 2011 was not a financial mulligan
Much of the recent conversation about ETFs has to do with the hidden risks of “synthetic ETFs,” risks which are not present in their mundane relatives known as “physical ETFs.”
We compute an asset allocation deviation or “out of balance” number for each household’s primary retirement assets and rebalance to lower this number.
“Successful active management is a fantasy stoked by the financial services industry.”
Q: I am a 65-year-old retired widow and I have a large IRA. How should I invest if I don’t need this money?
“Many investors think active managers can shift out of stocks in time to stem losses in bear markets. Not true.”
The world markets groaned as the burden of the rising American debt and the European deficit weighed down more productive countries.
Learn about the index preferred by the person who invented index funds with the Vanguard S&P 500. And no, it isn’t the S&P 500.
“A blindfolded chimpanzee throwing darts at The Wall Street Journal can select a portfolio that can do just as well as the experts.”
“One of an advisor’s greatest challenges? Directing client expectations – and meeting them with portfolio performance.”
When Gordon Murphy, an investment banking veteran, was told he only had six months to live, he decided to use his last days to write a book aimed at changing the way most individual investors think about investing.
“Let every man divide his money into three parts, and invest a third in land, a third in business and a third let him keep by him in reserve.”