Can You Afford a 50% Loss? That’s the question I asked readers in March 2014. I wrote: Can You Afford a 50% Loss? It’s impossible to have it all ways. In order to craft an investment portfolio that can act as an all-weather armadillo, you must be willing to forgo potentially substantial upside rewards to balance against the horror of a downside wipeout. If you are retired or saving for retirement in the not-too-distant future, you can easily get a knot in your stomach when you look at the basic math of downside portfolio protection. By example, when you lose 50% on an investment, you must … [Read more...]
Here’s the Minimum You Should Invest in Fixed-Income
Back in May of 2002 I warned readers of the dangers of market timing, and of investing too much of their portfolio in equities. I wrote: Your Focus: Dividends & Interest In this issue, I re-emphasize why I think conservative investors must focus laser-like on fixed-income interest and dividends from common stocks. No matter what hype you read in the media or hear from brokers, stocks in general are not cheap—far from it. When all you get from the average big company stock is a 1.5% yield and you pay nearly 30 times earnings in the process, you are not looking at bargains. As you know, … [Read more...]
How Can You Spot a Loser in Investing?
Back in July 1994, I wrote: You Has It or You Don’t. Dressed in snakeskin, feathers, grease paint and radiant colors, New Orleans gris-gris musician, Dr. John, delivers his musical message. Funky, gumbo-tinged rhythms spiced with a Bayou flavor makes for a perennial Mardi Gras atmosphere when delivered by Crescent City favorites like Jessie Hill, Cyril Neville, Chuck Carbo, Allen Toussaint, and the eclectic Night Tripper, Dr. John. When asked what makes the whole musical gumbo of New Orleans come together, Dr. John explains that it’s the groove of the thing, a pulse, an inner self sort … [Read more...]
Can Politics Predict the Markets in 2019?
I have written in the past that politics can have a great effect on market performance. Today America is enduring one of the most contentious political climates in memory, and at the same time the stock market has become volatile. The best year in the four-year presidential election cycle is the year before the election. In this cycle that’s 2019. Since 1875, the average performance of the S&P 500 in the calendar year before a presidential election has been 14.3%. The presidential election year itself comes in next with an average of 10.9%, and midterm election years and the year after … [Read more...]
Are You Investing in the Armored Truck of Financial Markets?
Are your investments characterized by the flash and speed of a supercar, or the reliability and protection of a Brinks truck? There’s nothing wrong with a super powered automobile made to take on curves at maximum speed, but the power that makes those machines exciting, is also what breaks their parts. All that torque can be hard on an automobile. Meanwhile, the massive diesel engines and reinforced steel protective bodies of armored trucks make sure its cargo reaches the destination. Back in 1990 I called Treasuries “the armored Brinks truck of financial markets.” I was responding to … [Read more...]
Most People Aren’t Measuring Performance Correctly: Here’s How
When you measure performance in your portfolio, are you getting the right picture? If you are like most investors, the answer is no. Here is what I wrote in December 2013 about how you should be measuring performance: Cycles and Investment Success Understanding cycles is vital to your long-term investment success. Most folk intuitively understand that the economy and the financial markets go through cycles. The economy expands and then it contracts, the stock market rises and falls, interest rates go up and they go down. Cycles just come with the territory in a free market economy, but … [Read more...]
What Will Happen if Trump Increases Tariffs on China?
This week President Trump said it would be “highly unlikely” that he would hold off on increasing many tariffs on Chinese goods from 10% to 25%. Analysts are asking, what will happen if he goes forward with his plan? The media is answering that question with a spectrum of possibilities ranging from apocalypse to Armageddon. But what happens if Trump doesn’t take a tough stance with China? What is China’s endgame? And, if China is successful in implementing its plans via unfair trade practices, would the potential outcome be any better for the U.S. economy than the negative aspects of a … [Read more...]
Are You a Shepherd or a Gunfighter?
Before you answer, remember that at least 50% of gunfighters end up dead. Are you the type of person who will dutifully grow your investment portfolio over the years by shepherding it in the right direction? Or will you risk it all in one high risk gunfight after another until your number is called? Consider what I wrote here, thirty years ago in December of 1988. It’s a comparison of some high-level shepherding vs. some inexperienced gun slinging. Do you know the two most powerful words in investing? If you’ve been with me through the years, you know the answer. But for all of my … [Read more...]
My Concentration Is on Full Faith & Credit Pledge U.S. Treasuries
As Wall Street tumbles, my concentration is on full faith and credit pledge U.S. treasuries. Reuters' Caroline Valetkevitch reports on the market: The Nasdaq fell 3 percent on Monday as investors dumped Apple, internet and other technology shares. Shares of Apple Inc fell after the Wall Street Journal reported the company had cut production orders in recent weeks for all three iPhone models launched in September. The iPhone maker’s stock dropped 4.0 percent to $185.86 and is now down 19.9 percent from its Oct. 3 record closing high in the wake of a disappointing holiday quarter sales … [Read more...]
Are You About to Retire Broke?
Most Americans are simply not saving enough. GOBankingRates released a survey this week showing that 42% of Americans will retire broke. Hopefully, that doesn’t include you, but even if you have been saving, it’s a good bet you could do more. In July 2014, I explained to readers why they should boost savings. Boost Your Savings The strategy implication of a low-return environment is that savings must play a greater role in your investment plan. The stock and bond markets aren’t going to bail you out. To secure a prosperous financial future, today’s low-return environment demands that … [Read more...]
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