Your investing future does not have to be relegated to a public transportation type of experience. You have a choice. And you can go in first class comfort or, instead, take a seat in the back of the bus. Here’s what I mean. To start, don’t spring for yesterday’s investments – stock index funds or most equities centric funds. Don’t settle for government bonds that pay virtually nothing today, or for casino-like big S&P 500 stocks that pay no dividends but often sell for criminal market cap-to-sales ratios. By now you undoubtedly realize that robo-advisors, whatever they are, offer … [Read more...]
The Hubris Indicator
Those of you who have been active in the markets for more than a couple of months will get a chuckle out of this. When all of the newly minted stock market geniuses start boasting that Warren Buffet is washed up, it's not a bad idea to approach the markets with a little more caution. Shawn Langlois reports at MarketWatch: Did we just witness “an epic signal of a blow-off top” ... ? Yes, says Gary Evans of the Global Macro Monitor blog, who pointed to the recent action on Barstool Sports founder Dave Portnoy’s Twitter feed as the reason. On Monday, Portnoy slammed Berkshire … [Read more...]
How Valuable is Thirty-Thousand?
You want some ugly math? Look at public pensions. They assume an expected rate of return above seven percent. What if that’s not met? In the real world, there are consequences. Take, for example, a million-dollar portfolio. If you “need” a return of seventy thousand, or seven percent, what happens if you don’t get it? You’re underfunded. A more reasonable expectation would be, say, four percent, or forty thousand. Pensions are invested in a mix of bonds and stocks, so getting stock market returns is basically impossible. In the above example, an actual return of four percent leaves a … [Read more...]
Here’s How Tiny Sweden Beat China
Tiny remote Sweden, partially sitting in the polar region, is home to only a little over 10 million souls. China, meanwhile, is a massive country, home to nearly 1.4 billion. You may not think Sweden would have the wherewithal to defeat China in any theater of competition, but in one growing industry, Sweden is prepared to dominate its Chinese rival. In the race for 5G technology leadership, Sweden’s Ericsson may be about to best China’s Huawei. Or, more accurately, Huawei’s ties to China’s Communist Party government are about to blow the technology company’s chances of a worldwide 5G … [Read more...]
How to Deal with a Crisis You Can’t Predict
Do you consider yourself well-prepared? There’s no predicting some scenarios— the so-called Black Swans. Below is a troubling illustration I wrote some time ago of just how bad facing the unexpected can feel: Knock, Knock It’s 1:30 a.m.—pitch black on your suburban porch. A woman whom you do not recognize is at your front door, while an unfamiliar car idles in your driveway. Peeking out, you talk through a side window to the interloper, who explains that you had called her, and here she is. Your 1911 Handgun You, of course, had not called her, and, as a phone call goes into the police, … [Read more...]
Goldman Sachs Strategist Called Out for Embarrassing S&P 500 Prediction U-Turn
Brian Sozzi of Yahoo! Finance took time today to call out Goldman Sachs strategist David Kostin for the quick reversal in his predictions for the S&P 500. Sozzi wrote: My oh my how a two-week long bear market rally and unprecedented stimulus actions by the Federal Reserve could change one’s thinking on stocks still dealing with the bruising coronavirus pandemic. Somewhat under the radar on Monday, veteran Goldman Sachs strategist David Kostin said his “near-term downside” scenario for the S&P 500 of 2,000 is “no longer likely.” Kostin’s call was initially made on March 22, the day … [Read more...]
My Three-Week-Long Investing Program
In my personal portfolio, I am ramping it up over the month of April into May. My own largest fixed income holding (individual bonds, while clearly a superior option are not ideal for me as I am on the road and out of touch at annoying times) a full-faith-and-credit-pledge GNMA’s-centric fund is ahead by 3.0%, or an annualized 12.0%. I am happy with this. GLD, one of my gold proxies is ahead by 6.5%, or an annualized 26%. My Swiss currency proxy (I have been investing in Switzerland since the early seventies. Click to the Swiss Way) is up 1.4% YTD. Encouraging. All in all, I am … [Read more...]
Coronavirus Snapped the Cord on the Market Elevator
For the past ten years, the stock market has been an elevator that has only gone up. Now the cord has snapped. What floor are you falling from? Here’s how I explained what I call “elevator investing” some years back. I wrote: Elevator Investing Where do you want to be when the cord snaps? I often think of risk management with a simple elevator analogy. In the investment process, I quantify risk first. Then I evaluate potential gains. Just envision, if you were in an elevator and the cord snapped, where would you be better off? Dropping from the second floor or the 10th floor? Makes your … [Read more...]
Never Bet the House
Investing is not betting. There are people who buy stocks to invest in them, and people who buy stocks to bet on them. Never be the latter. After the crash of 1987, I compared that to the surprise defeat of “sure thing” Sonny Liston by Muhammed Ali. I wrote: “Bet the house on Liston…it’s a sure thing.” Once again, what could never happen, happened. Once again, the underdog defeated the favorite. And once again, people learned — many the hard way — that there are few “sure things” in life. The lead quote appeared in a provocative Wall Street Journal ad run by FGIC (municipal bond … [Read more...]
Invest with Balance
Diversification and patience are essential to long-term investment success. Put all your chips on one stock and you risk financial ruin if that stock ends up being the next Enron or AIG. Buy without providing time for the investments you select to work out and you may experience the same outcome. A diversified portfolio that includes stocks and bonds is ideal for retired investors and those approaching retirement. Balanced portfolios are less volatile and less risky than all-stock portfolios. Balanced portfolios also help those investors who no longer have the safety net of a regular … [Read more...]
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