Are Stocks the Best Long-Term Investment?
The two-decade bull market in stocks that ended in 2000 convinced a generation of investors that stocks are the best long-term investment. Dow 36,000 and Stocks for the Long Run became cocktail-party fodder. There is no questioning that stocks put up some impressive numbers in the 1980s and 1990s. From... Read the full story
Stock Returns at Half the Risk
Including dividends, the S&P 500 is now up 7.5% YTD. Not bad. At a 7.5% compounded annual return, you would double your money every 10 years. But when you consider the volatility that stock market investors had to endure to earn that 7.5%, it doesn’t sound so compelling. Study my chart below. The... Read the full story
Vital Intelligence for Investment Success
If you read The Wall Street Journal or the Financial Times, you have likely heard about the “risk trade.” It’s a term journalists have been using with increasing frequency to explain the behavior of financial markets. You see, since the financial crisis struck, risky assets have either been rising... Read the full story
Which Portfolio Would You Rather Own?
Given a choice, most investors would rather own the portfolio represented by the blue line in my chart. But in reality, many own something closer to the portfolio represented by the black line. The black line tracks the performance of the S&P 500. The blue line tracks the performance of a balanced... Read the full story
Back to Even and Then Some
Are you tired of the media’s nonstop market analysis yet? It’s distracting at best and harmful to your health at worst. With the Dow up 7.1% in the month of July, it’s worth noting how little ground has been picked up from mid-June of this year through the end of July. Even after climbing out of... Read the full story
My #1 Diversification Tip
I often write about diversification and the benefits diversification offers to investors. Diversification is said to be the only free lunch in investing. It allows you to lower risk, without sacrificing meaningful return. The basic concept of diversification is of course intuitive. Don’t put all your... Read the full story
Avoid Australian Equities?
The correlation between Australian stocks and Chinese stocks is near a record high. If you are bearish on China, you probably want to avoid Australian equities. Read More →
90 Million Emotions Wreak Havoc
With the market in a correction and off 10% this quarter, emotions are running high. I want you to take a minute this weekend and get your bearings. Clear your head of the emotions that hinder sound analysis and get yourself on the road to the investment success you deserve. A lesson worth remembering... Read the full story
The Most Important Takeaway from the BP Oil Spill
The oil spill in the gulf is an economic and environmental catastrophe. BP made some serious missteps that have cost the company and gulf coast residents dearly. While tragic, there are many lessons to be learned from the spill. There will be important takeaways for everyone involved or affected by the... Read the full story
Simple Arithmetic Vital to Your Investment Success
My arithmetic of portfolio losses chart shows the return necessary to break even after incurring a loss. The horizontal axis shows the assumed portfolio loss incurred. The vertical axis shows the portfolio gain required to break even. My chart clearly illustrates that the bigger the loss you take, the... Read the full story
