In April of 2011, I wrote: My job is to help you separate fact from fiction and lay out a game plan for you and your family that will ensure your personal and financial security in the unstable and unsettling times that lie ahead. The broad battle plan that I’ll cover over the next few months will include the complete scope of the energy consumption/investment/personal security issue. Here is what separates what you read from me from most others: (A) I have no financial axe to grind and no ulterior motive. (B) I am not looking to make any new friends or curry favor. I am not, not … [Read more...]
Is Your Portfolio Balanced Like a Harley?
With over 100,000 miles of Harley touring behind me, I can assure you of the value of a smooth ride. No one enjoys being jolted and jarred, not on the road or in securities markets. When markets become volatile, every investor is looking for smoother performance. In August 2013 I explained that the key to smooth performance, whether on the road or in markets is counterbalancing. I wrote: Managing a common stock portfolio takes— above all else—patience. Your goal should never be what to sell next; rather, it should be what stocks you can hold through thick and thin. It is true that portfolio … [Read more...]
The Butterfly Effect and Chaotic Markets
Securities markets endure any number of threats each day. Sometimes news that appears dire isn’t necessarily so. Other times, the market overlooks the little signals that portend a rout. After the 2005 revaluation of the yuan by China, I discussed how such seemingly small developments could create major change via the “butterfly effect.” I wrote that September: I’ve written over the years about Chaos Theory, a subject on which I have read extensively. Of the scads of neat books on Chaos Theory on my shelf, I would send you first to Chaos—Making a New Science by James Gleick (author of the … [Read more...]
Are You Setting Yourself Up for a Retirement Disaster?
In 1999, most equity investors thought they couldn’t go wrong. Anything they bought simply gained in value. Easy, right? Not so fast. Soon, many Americans were facing a retirement disaster of their own creation. In July of 2004 I wrote: You’ve Lost 37%… Treasuries are boring! Right? You may be in the boring, boring camp, as are many investors. I hear Treasuries described as boring all the time. And yet I wonder what it is that is just so boring about a security that has no credit risk, no stock market risk, and offers a steady flow of cash. Furthermore, the U.S. government 100% guarantees … [Read more...]
Three Dangerous Traps Investors Face
There’s a lot you can’t control when you’re investing. Putting your money in securities necessitates some risk taking. You probably aren’t managing the companies you own, or the governments you lend to yourself, so you have to trust managers and politicians to do that. And you’ll never direct consumers and taxpayers, so revenue streams are completely out of your control. There are though, things you can do to put yourself on sounder footing. In July of 2004 I wrote: Compound Interest and You Here’s a compound interest story that should help you and your spouse. Let’s assume a hypothetical … [Read more...]
You Have Two Jobs to Do in Record Breaking Markets
The S&P 500 500 index closed at a record high yesterday, and could do so again today. Back in June of 2004 I was telling readers about how to position their portfolios when stock prices rise well above trend. I told them then that they had two jobs in preparing for such lofty stock prices. I wrote: So what is your plan during periods when stock prices rise well above trend? You have two jobs. First, be sure your exposure to equities does not exceed what, for you, is a conservative and appropriate level. Second, place more emphasis than normal on dividends. Look to maximize yield. And by … [Read more...]
Can You Bank on the Fed?
There’s a saying in finance that you shouldn’t fight the Fed. What that means generally, is that if the Fed is encouraging riskier or less risky behavior with its policies, you should go along. But what happens when the Fed is giving mixed policy signals? The Fed increased rates as recently as December 20, and was discussing further hikes even later. Now, in June markets see the Federal Open Market Committee signaling two possible rate cuts in 2019. That’s a neck snapping change of course. Such turnabouts aren’t new for the Fed though. Back in April 1995 I wrote: In recent testimony to … [Read more...]
Learn How Risk Reward & Time Are Related
You cannot possibly save properly for retirement without a thorough comprehension of the miracle of compound interest and the value of time. I like the materials Vanguard has prepared to introduce the risk, reward and time theory to retirement Investors. Click here to kick start your mission to retirement security. You will be glad you did. Originally posted on Young's World Money Forecast. … [Read more...]
Are You Sitting the Bench When You Should Be Winning the Game?
Last week I explained that I don’t miss the boat because I’m always in the boat. The post was an outline of my long-time philosophy for remaining fully invested so as not to miss the best times of market performance. My avoidance of market timing isn’t simply intuitive. In fact, in December 1991 I detailed some of the research on which I based that philosophy. I wrote: Your Biggest Mistake in Investing Is to Market Time You don’t want a fund that is an active trader. Market timing does not work; it’s a fool’s game. Forbes presented one version of the case well in its issue of 28 October … [Read more...]
I Don’t Miss the Boat, Because I’m Always in the Boat!
Market volatility is up, and any time that happens I get asked one question more frequently: “Is it time to sell it all and wait?” My answer is an emphatic no. Attempting to time the market by selling out and buying in is a great way to miss the best days and months of the market’s performance. Instead I recommended in May of 1991 that investors prepare ahead for market volatility by focusing on stocks with low betas. I wrote: In the stock market the words risk and volatility are synonymous. I want you to concentrate most of your efforts on stocks that are less volatile than average. What … [Read more...]
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