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...]
Write These Six Words Down
If you are looking for the best advice I can give anyone getting started in investing, you’ll need to travel back to November 1989. At the time, I was debriefing on the Blanchard’s NCMR New Orleans Investment Conference of that year, at which I had spoken. An attendee asked me a question, and my answer included the six most important words in investing. I wrote of the scene: THE MOST IMPORTANT WORDS IN INVESTING I’ve just returned from speaking at the biggest investment conference in the U.S. I now speak at only one national conference per year, and Blanchard’s NCMR annual extravaganza is … [Read more...]
The Antidote to Inflation Poison
In my long investment career, nothing has worked harder against my success than the negative compounding effect of inflation. Every year inflation reduces the value of the money I have worked hard to save, and impedes my progress in reaching my investment goals. In March of 2010, I explained to readers the effects of inflation I had seen in my lifetime. I wrote: Nickels & Dimes You may have had a similar experience growing up to the one I’m about to tell you. The early 1950s was a great time to be a kid, even more so for me in Cleveland Heights, Ohio, with Paul Brown and Otto Graham … [Read more...]
How the Rolling Stones Amassed a Fortune Where Others Have Failed
Last week Mick Jagger shared some video of his cardio workout routine. There he was dancing and moving to the music like only Mick can. Jagger was showing the world that, despite recent heart surgery, he is not slowing down. After years of hard touring and the excesses of the rock and roll lifestyle, Mick, Keith, and the rest of the Stones remain vital. During decades of near constant work, during which many of their contemporaries have failed, they have amassed fortunes. I described their investing process back in January of 2003. I wrote: Geezers in Wheelchairs… This year is the 40th … [Read more...]
No Second-Guessing, No Deviation from Focus
Here’s what I told you, all the way back in February of 2015: stay fully invested. I wrote: Stay Fully Invested As I’ve written ad nauseam, I do not get in and out of the markets. I maintain my fixed income/equities balance, adjusting as time passes (fast) for my age. For an investor who is crafting a dividends/interest-oriented portfolio to pass along to heirs, I can live with a 75/25% equities/ fixed income mix. But where income and safety in retirement is the target, the reverse ratio is optimal—no second-guessing, no deviation from focus, and no market timing to be … [Read more...]
Avalanche! It Is Astonishing How Your Money will Pile Up
There is little as satisfying as the long-term gratification felt after planning ahead, saving, and reaping the rewards of your efforts. The best way to achieve that euphoria is to harness the power of compound interest by purchasing stocks and bonds that pay you a steady stream of income. Then put that income to use by compounding it, over and over again like an avalanche. In June of 2016 I encouraged investors to harness this “avalanche of return.” I wrote: An Avalanche of Return The most important aspect of investing for the long term is—without a doubt—compound interest. The act of … [Read more...]
The Most Frequently Asked Investor Question
Throughout my years in the investment industry, the question most frequently asked by clients is probably “How are we doing?” In June 2015 I explained how I answer that question. I wrote: How Are We Doing? Throughout my first 28 years in the investment industry, I worked in the trenches, talking daily with clients and the financial media, as well as speaking at investment seminars around the world. All that changed in 1992, when I decided to move off the front lines and concentrate exclusively on research and writing, and Debbie and I moved to Key West, only 90 miles from Cuba. Hard to … [Read more...]
Miss This Investing Concept to Your Everlasting Sorrow
Lack of patience, more than anything else, hamstrings investors in their pursuit of profits. I wrote in July 2004 that impatiently trading in and out of equities with no eye toward compound interest will bring investors everlasting sorrow. Compound Interest and You Here’s a compound interest story that should help you and your spouse. Let’s assume a hypothetical $10,000 investment with a 7% annual return for 20 years. Investor A draws the 7% ($700) each year for living expenses. At the end of 20 years, the original $10,000 in capital remains in place, and $14,000 in simple interest has … [Read more...]
Why Not Invest at Negative Interest Rates?
Would you pay someone else to take your money? If you answered no, good for you. If you answered yes, many investors in European government and even corporate debt feel the same. The Wall Street Journal's Daniel Kruger reports that investors have been paying European governments and even corporations like LVMH to hold their money by purchasing bonds at negative yields. Kruger writes: A growing number of investors are paying governments in Europe for the privilege of holding their bonds. The amount of negative-yielding government bonds outstanding through 2049 has risen 20% this year to … [Read more...]
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