You can only imagine the despair when impatience rules the day. On a recent sailing trip the current in Woods Hole was dead against us. Instead of fighting the current we decided to wait for it to change in our favor. We anchored outside of Hadley’s Harbor, had lunch, went for a swim—it’s hard to imagine a more idyllic spot on the water. We made it to Edgartown on the Vineyard later in the day. Waiting out the current ended up being a great decision. Waiting out the recent junk bond sell-off was never an option for some retail investors. Mom and pop investors didn’t understand the … [Read more...]
World in Crisis: Oil Shrugs and Heads below $100
Imagine only 10 years ago, before most Americans had heard of “hydro-fracking” or “horizontal drilling.” Imagine what a war in Iraq (the eighth largest oil producer) and skirmishes on the border of Russia (the third largest oil producer) would have meant to the price of oil? Prices would have skyrocketed. But today, in the face of instability in some of the world’s most vital oil producing regions, the price of oil is headed down. As you can see in the chart below, on July 31 the price of WTI crude dropped below $100 a barrel for the first time since May, and is now at levels not seen since … [Read more...]
Survey Says? Optimism Growing.
The NFIB Research Foundation’s survey of Small Business optimism ticked up this morning, continuing a trend of recovery from some of the worst readings ever. But optimism still hasn't reached its historical mean, and this late in the business cycle, it’s hard to imagine small business owners reporting robust optimism before the economy is tested once again. … [Read more...]
Grateful for Cash
“You ask me where the four winds dwell In Franklin's tower there hangs a bell It can ring, turn night to day Ring like fire when you lose your way” --Franklin’s Tower, Grateful Dead Having a stash of cash outside of your portfolio has always made sense to me. You never know when the lights will go out. And that’s when you realize you need it. … [Read more...]
A Retirement Worth Living For
You don't have to have a ton of money to have a retirement worth living for. I was reminded of this last week while spending time at our log cabin in the White Mountains of New Hampshire. The highlight of our trip ended up being a hike, which was basically free, and not all of the other attractions that drain the wallet and add to the waistline. We did three hikes. Two were pretty easy and one was tough. Mount Jackson was the tough one. It's one of the 4,000 footers in the Presidential Range. The nice thing about this 4,000 footer is you start at around 1,000 ft. What stands above … [Read more...]
How Much for a BTU?
Record low temperatures in much of the U.S. have kept air conditioners from running, and electricity demand low. The low demand, coupled with an inventory buildup running at a record pace, has led to price declines for natural gas. As you can see on my chart of estimated energy costs per million BTUs for various fuel sources, natural gas is heading toward parity with coal. Meanwhile prices for oil remain elevated, and post-Fukushima Uranium prices continue to fall. … [Read more...]
Your Best One-Two Punch
For my money the best balanced fund combination is a 50/50 mix of Vanguard Wellesley and Wellington. For clients I prefer a mix of Young Research's retirement compounder stocks and individual bonds and bond funds. The key difference from the Wellesley and Wellington mix is our stocks provide an eclectic group of international holdings and the bonds have a shorter maturity. But as you can see with my chart it's the balanced approach that gives you the confidence to stay in the fight. … [Read more...]
Words from the Wise
Richard Russell's timeless Rich Man, Poor Man has been there for me when I needed some perspective. I hope it will do the same for you. RICH MAN, POOR MAN: In the investment world the wealthy investor has one major advantage over the little guy, the stock market amateur and the neophyte trader. The advantage that the wealthy investor enjoys is that HE DOESN'T NEED THE MARKETS. I can't begin to tell you what a difference that makes, both in one's mental attitude and in the way one actually handles one's money. The wealthy investor doesn't need the markets, because he already has all the … [Read more...]
The Calm Before the Storm
You don't have to be able to predict the future to be a successful investor. But being armed with battle hardened advice can certainly help you become one. From Richard C. Young's Intelligence Report, July 2007 (subscription required): Your Portfolio Mix At the start, retired investors and investors saving seriously for retirement (76 million boomers will begin retiring next summer) must answer two basic questions: (1) What is the proper mix of stocks and bonds? (2) How much money can be drawn annually from an investment portfolio? I have used Ibbotson data and examined 20-year rolling … [Read more...]
The Intelligent Investor: Part III
“It is surprising how little attention has been paid by economists and by Wall Street to this development. The debt of corporations has expanded nearly fivefold while their profits before taxes a little more than doubled,” wrote Benjamin Graham in The Intelligent Investor. What Ben Graham was referring to was the expansion of Net Corporate Debt from $140.2 billion in 1950 to $692.9 billion in 1969—a fivefold increase—compared to the expansion of Before Income Tax Profits from $42.6 million to $91.2 million—only a little more than double. A fivefold increase in debt only to double profits … [Read more...]
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