The answer to the question of whether long-term investing is dead or alive comes down to my favorite three letters in the alphabet: Y.O.U. When I speak with investors, most of our conversation is about what’s going on at that moment in their lives: Driving to their second home, getting ready for an exercise class, recovering from hip, knee or shoulder surgery, running to a meeting, running (walking) to rehab, or winding down from a busy work trip or a European tour. With so much attention today given to robo-advisors, financial planning and one stop investing, it’s hard to know which way … [Read more...]
Dead or Alive? The Future of Long-Term Investing: Part II
Ask anyone if they’re a long-term investor and nine out of ten will tell you they are most definitely long-term investors. That is, unless something crazy happens to the market. It’s like the profile pieces you read about someone’s workout and eating regimen. Every minute of the day is carefully planned, and it seems every person profiled sticks to salads topped with salmon and the occasional piece of dark chocolate. In the real-world, life gets in the way, and it gets messy. OK, maybe it’s doable if you don’t have kids, or a job, or grandchildren, or any other fabric of life that makes it … [Read more...]
Dead or Alive? The Future of Long-Term Investing
Is long-term investing dead? You would think so reading even my favored Wall Street Journal as it beats the drum for the future robo-advisors—a model that makes decisions based on an algorithm and human input (a phone rep fresh out of college) to determine your financial future. Sounds good on paper. We’ll see how well they do when markets crater and the phone lines light up like a Christmas tree. It’s happened twice already this century, and that’s when it matters most. Everyone knows that long-term investment success is hard. Maybe not everyone. I’m being too generous. But listen, if … [Read more...]
How Many “Retirees” Will Keep Working?: Half Haven’t Saved a Thing
An incredible 48% of Americans aged 55 and older haven't saved a thing for retirement. I've asked the question "How Many “Retirees” Will Keep Working?" and it appears that the answer is, a lot. Despite this disturbing proportion of Americans who haven't saved a bit, the numbers are actually getting better. In 2013 the percent of older Americans who hadn't saved anything was 52%. Bloomberg's Ben Steverman writes: Two in five of such households did have access to a traditional pension, also known as a defined benefit plan. However, 29 percent of older Americans had neither a pension nor any … [Read more...]
Can Private Equity Really Save Sinking Pension Funds?
In The Wall Street Journal, Jason Zweig tells the story of Calpers, the nation's largest pension fund, and the nation's growing investments in private equity. Like Calpers, many pensions are hoping to meet unrealistic return expectations (something I have written about many times, including here, here, here, and here) by investing in private equity. The problem is, it isn't a sure bet that private equity will be able to produce the returns necessary. Zweig writes: Still, the future for private equity might not be as lucrative as the past, with money gushing in and with buyouts priced near … [Read more...]
Illinois: New Governor, Same Old Pension Pyramid Scheme
Writing at Forbes, Elizabeth Bauer asks if Illinois' public retirement system is a pension fund or a pyramid scheme. The evidence doesn't look good. Despite electing a new governor, Illinois seems to be using the same old tactics to plug its pension holes. Bauer explains: Illinois's new elected officials and their advisors simply don't believe that it matters that public pensions are pre-funded. They view pension funds as something that exists on paper, and pension reporting as a nuisance to be avoided where possible, and ignored otherwise. Through their actions -- and indeed their words … [Read more...]
What Do You Need to Do Before You Retire?
Are you ready to plan ahead and to avoid rookie mistakes in retirement? At Money, Alix Langone discusses some of the things retirees need to do before they retire. He writes: It’s the biggest worry for people approaching retirement, financial advisors say: “Will I have enough? Where’s my cash flow coming from?” But if you actually map out your spending ahead of time, you’ll know the answer (at least for the short term), and you’ll enjoy greater peace of mind when you stop working. At a minimum, it’s important to figure out your first three to five years of cash flow — the money you will … [Read more...]
When You Get OLD, Things Have to Be RIGHT
It all started for Chuck Berry on 21 May 1955 with Chuck’s simple three-chord--Bb, Eb7, F7 (played in A by many guitarists for ease)--recording of Maybellene, an adaption of “Ida Red,” with Jerome Green on maracas, Johnnie Johnson on piano, Jasper Thomas on drums, and the legendary Willie Dixon on bass. By the end of June 1956, “Roll Over Beethoven” ran to #29 on the Billboard charts. Berry would go on to produce hit after hit, including “School Days,” “Rock and Roll Music,” “Sweet Little Sixteen,” and “Johnny B. Goode.” Berry, the Real King of Rock & Roll, died in March of 2017, … [Read more...]
Build Your Investment Strategy for the Field of Play
Are you a trader or speculator? Or are you long term investor saving for a comfortable retirement? What’s your field of play? In December of 2011 I wrote to readers explaining that each sport is dependent on the field of play. Coaches and players enter the game with a clear understanding of what they are trying to achieve, and the area within which they are trying to achieve it. Does that describe your current investment planning picture? If not, your first step is understanding your field of play. I wrote: Football, baseball, soccer, hockey—each has something in common that can be … [Read more...]
Underfunded Pensions and a Devil’s Bargain
In Pontiac, Michigan, pensions for public employees have been underfunded for years, and the city is going to raise taxes to help fund pension payments. This same predicament is playing out across America, with pensions in many states and cities woefully underfunded, and with pension boards who overestimate returns to paper over the problem. Like many pensions, those in Pontiac are restricted on the proportion of assets that may be invested in equities compared to fixed income and other securities. The current limit is 40% of assets may be invested in equities. These limits are in place … [Read more...]
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