The late great Sir John Templeton, who was a pioneer in global investing and the manager of the Templeton Growth fund from 1954 to 1992 once said "It is impossible to produce a superior performance unless you do something different from the majority.” Templeton was a contrarian. His contrarian investment strategy led to one of the most impressive performance records in mutual fund history. A $10,000 investment in the Templeton Growth Fund in 1954 would have turned into $3 million at Templeton’s retirement in 1992. How can you best invest like a contrarian? Here is a good place to … [Read more...]
The Great American Oil Rush
Dividend Stocks for the Long-Run
When we developed Young Research’s Retirement Compounders (RCs), our aim was to find a compelling competitive advantage to make the RCs a big winner, especially during bad times. Our overriding goal was to help investors like you achieve investment success with comfort and confidence. Our strategy was to accept underperformance during speculative market runs (like we’ve seen in recent years), with the expected tradeoff of better performance during down markets. The idea was never to beat the market over time or on a consistent basis. Rather, we fully expected the low risk RCs (both price … [Read more...]
Don’t Chase Returns!
“Don’t chase returns.” It’s a mantra heard everywhere in the investment industry, but people still do it. If experience hasn’t already taught you the hard way, here’s the St. Louis Fed with the hard research proving it: If you’re chasing returns, you’re going to be months late. A few months ago, we highlighted research showing how much chasing returns in equity mutual fund investing can reduce performance, noting that this behavior had cost investors around 2 percent per year over the period 2000-2012. New research over a longer period of time shows similar results. In a recent Economic … [Read more...]
Even the Wealthy are Broke
Upper-middle income Americans aren't saving much money says a report from the Federal Reserve. Only 45% of upper-middle-income Americans reported saving any money in 2012. This doesn't come as such a surprise to anyone paying attention to the personal savings rate in America. The rate, while somewhat improved since 2005, is below its historical mean by 3.1 percentage points at only 5.3%. Another sad statistic from the Fed report shows that 68.6% of Americans feel as though their financial well-being is about the same, worse, or much worse than in 2008. For those with cloudy memories, … [Read more...]
This Investing Fad Never Goes Out of Style
The only investing fad that never seems to go out of style on Wall Street is, well, fad stocks. King Digital Entertainment, maker of the popular…err getting less popular, Candy Crush Saga app is today’s poster boy for fad stocks. If you aren’t familiar with Candy Crush Saga (you’ve dodged one of life’s great hardships), think of it like Angry Birds—lots of levels that get more challenging as you move higher—but less successful. When is the last time you played Angry Birds? Candy Crush is King Digital’s primary source of revenue. And it has been a big winner for the company. King … [Read more...]
Mutual Funds of the Future
"Never pick a stock again," proclaims the headline of a recent article by Money. The California Public Employees Retirement System is considering making cuts to its allocation of active managers. Meanwhile, robo-advisors are hawking a “new” model of investment management centered around broad based index ETFs (I’ll have more on robo-advisors in a future post). The financial press and many more in the finance industry are hailing index based ETFs as the savior of the investing masses. Is this the real deal? Are we finally seeing a secular shift in the money management business or is … [Read more...]
Higher Wages on the Horizon
Job openings hit a more than 13-year-high yesterday. The rising number of job openings signals continued improvement in the labor market. Job openings are also up as a percentage of the unemployed. There is now a job opening for every two unemployed workers. The higher number of openings signals that stronger wage growth may finally be on the horizon. My chart shows the ratio of job openings to unemployed workers versus the annual rate of change in the employment cost index. Job openings tend to lead wage growth by about six months. If we are to believe the signal being sent by the job … [Read more...]
Best Day to Buy a New Car: This Sunday
Here’s a fun post for you. According to data from Truecar, presented in the nifty infographic below, the best month of the year to buy a new car is August, the best day of the week is a Sunday, and the best time of the month is in the first few days of the sales month (not the same as calendar month—who knew). That makes this Sunday the best day of the year to buy a new car. Lucky you, if you are in the market for a new car. What if you already have plans this Sunday? No need to panic. Saturday is the second best day of the week to buy a new car. And when I say car, I really mean … [Read more...]
Best Bond Funds to Buy Now
What are the best bond funds to buy now? This is a simple question that is often unnecessarily complicated by investors. The best bond funds to buy now are the same bond funds you should have bought yesterday and the same bond funds you should buy tomorrow. But isn't past performance a poor predictor of future results? Indeed it is, but the best bond funds are not those that earned the highest return in any given year. The best bond funds are the cheapest bond funds. Cost is one of the most reliable predictors of mutual fund performance. Who offers the cheapest bond funds? For my … [Read more...]
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