With few guarantees in the investment world, here’s one: Avoid companies growing their client base through acquisitions. It’s happening all the time, thanks to consolidation within the industry. But bigger isn’t better, especially when it comes to knowing your customers. Legendary investor and Vanguard founder Jack Bogle spoke about this when he was alive, and I’ve never forgotten it. What Bogle was referring to was the relationship between an investor and an advisor. But that sacred bond was muddled when a bigger company acquired a smaller one simply by writing a big check. Bogle understood … [Read more...]
There Are Plenty of Ways to Invest in This Market
You have plenty of ways to invest in this market if you’re A) dividend-centric (I am) and/or B) looking for a proxy to some of your bonds. Take a look at the charts below and understand what’s happening in the market today. Stocks by Dividend Decile Here you see a breakdown of stocks by dividend yield decile. The 8th Decile, not the tenth, had the better performance from 1975-2020. Caitlin McCabe reports at The Wall Street Journal on today's bull market: A greater number of stocks have been propelling the U.S. market higher lately, a signal that—if history is any … [Read more...]
Work to Make Money/Invest to Save Money
The U.S. government must finally wise up and put an immediate end to the insane double taxation of dividends. The government, facilitated by the Fed, is in an ongoing war to destroy the value of the dollar by printing money beyond any reasonable rate of expansion. Simply take a look at real estate prices to witness the explosion in liquidity. Do not let the government destroy the value of your retirement. Demand that the government ends the double taxation of dividends! Originally posted October 17, 2017. With the exception of the large sums of money that I invested in zero-coupon … [Read more...]
The Vanguard Wellesley Way
Vanguard Wellesley is a fund we have long admired at Young Research. It was once a go-to fund for clients, readers, close friends, and even dear family members. What gave Vanguard Wellesley Income so much appeal? Wellesley is the more conservative and younger cousin of the Vanguard Wellington Fund—the nation’s oldest balanced mutual fund. Over its almost 51-year history, Wellesley has invested an average of 65% in bonds and 35% in stocks. The bonds are primarily intermediate-term investment-grade corporates; the stocks are dividend-paying blue-chip names. Wellesley’s Baptism by … [Read more...]
The Three Bubbles Threatening Your Portfolio Today
OK, it’s time to talk about bubbles. Investor Jeremy Grantham of GMO fame has called a few bubbles over his stellar career. He sees three today: Bonds, stocks, and real estate. Your Survival Guy, not famous at all, fought through the live-fire of managing client money during two brutal bubbles already in this young century. It wasn’t easy, but we got through it. That’s what I see today. Knowing how to survive the worst of times is an acquired skill, and I’ve seen my share of it. When I think about a real estate bubble, I think about you. What can you do today or in the next few years to ease … [Read more...]
Don’t Chase Yield Off a Cliff, Do This Instead
You may think the phrase "speculative investor-driven home price bubble" sounds familiar. If so, you may be old enough to remember 2008, when an extremely low interest rate environment, encouragement by the government to lend, and yield chasing investors on Wall Street combined to tank the economy. Deja vu, right? Ryan Dezember reports in The Wall Street Journal: A bidding war broke out this winter at a new subdivision north of Houston. But the prize this time was the entire subdivision, not just a single suburban house, illustrating the rise of big investors as a potent new force in the U.S. … [Read more...]
You’re Rich When You Invest Like Croesus
One of my favorite investment themes is about investing like you don’t need the money. Because THE MARKET doesn’t care about your NEEDS. Time and time again it’s the investor who doesn’t need the market who ends up being as RICH AS CROESUS. I want you to think about your investments as lifetime positions that you don’t need to maintain solvency. Learn, like I do, from the rich and you’ll discover what TRUE investment success feels like. Konrad Putzier discusses Charles Koch and his company's real estate business, writing in The Wall Street Journal: Koch Industries Inc. is emerging as a … [Read more...]
Welcome to the Interest Rate Prediction Business, JACK!
Jack be nimble, Jack be quick. Jack jumped over the…you know how it goes. As investors stomp their feet because stocks are going down (the horror), let’s not forget what’s happening to bonds. Anyone who reached for yield on the 30-year Treasury is learning about duration—basically, for every one percent increase in rates, bond prices drop, in percentage terms, by the years of maturity. In other words, if rates go up, long-term bonds get killed by a factor many times worse than short-term bonds. It’s pretty easy to hold short-term bonds to maturity, in times like these, and handle the … [Read more...]
Richard Young Reports: 50+ Years with Fidelity and Wellington
I started in the institutional research and trading investment business at Model Roland & Co. on Federal St. in Boston in August 1971. Just up the street from Model were Fidelity Investments, and Wellington Management, both of whom I called on from my very first hours on the job. Over five decades ago, Ned Johnson, aka “Mister Johnson,” ran the show at Fidelity. Jack Bogle, “Mr. Mutual Fund,” had not yet left Wellington to start Vanguard. My focus in the initial going was international research and trading, and remains so today all these decades later. I still consider Fidelity and … [Read more...]
Deep Survival, Who Lives, Who Dies, and Why
In Deep Survival, Who Lives, Who Dies, and Why, author Laurence Gonzales explains, “The events that we call ‘accidents’ do not just happen. There is not some vector of pain that causes them. People have to assemble the systems that make them happen. Even then, nothing may happen for a long time.” In 1960, when MIT meteorologist Edward Lorenz was modeling weather systems, he discovered a tiny change in the initial state (1 part in 1,000), explains Gonzales, was enough to produce totally different weather patterns. It became known as the Butterfly Effect, “the notion that a butterfly stirring … [Read more...]
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