Fenway Sports Group is the parent company that holds John Henry’s ownership interests in the Boston Red Sox and the Liverpool Football Club. Last week, his money management firm, John W. Henry & Co., announced that it is closing. In its worst-performing programs, it has lost as much as 21% YTD and 32% over the past year. You can never afford to lose money, but it’s even more important not to lose it when you’re in retirement. What if you don’t own a baseball team or a soccer team to help you get through the tough times? I am sure there are a lot of people who used to be wealthy who … [Read more...]
Annuity Blimp Losing Air
When you get your insurance bill, you may not think insurers struggle to make money, but indeed some do. MetLife Inc. reported a third-quarter loss of about $1 billion compared to a gain of almost $3.5 billion last year. Of the loss, $1.6 billion was a goodwill impairment from its U.S. retail annuity business, where variable annuity sales dropped by 46%, or $4.6 billion. MetLife is the biggest U.S. life insurer by assets. You might remember it from the Snoopy blimps. But don’t get caught by the marketing blitz. Variable annuities have a tough road ahead. It may not be long before annuity … [Read more...]
Your Winning Formula for Dividend Investment Success
When we started Young Research’s Retirement Compounders (RCs) in 2003, the goal was to look for a compelling competitive advantage to make the RCs a big winner, especially during bad times. Our strategy was to accept underperformance during speculative market runs, regardless of the duration, with the expected tradeoff of better performance during bad markets. Patience is always required with such a strategy. 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 risk and business risk) to trail the major market … [Read more...]
How to Get Rich
I suspect that not many investors would own variable annuities if they knew more about them. But learning the ins and outs of variable annuities is like watching sausage being made. Don’t bother. You don’t want to get sick. Believe me when I tell you there are much more suitable investments for you to own. Yes, I know the arguments that are made for owning variable annuities in substantial portfolios, but come on, they’re like numbers 98 and 99 on a list of 100 things to do first with your money. A variable annuity is a salesman’s dream. The commission is hefty, and the sales pitch of … [Read more...]
#1a and #1b Investment Firms
Who wants to partner with Wall Street banks? You have JP Morgan tangled up with a recent trading loss of $2 billion and counting. Then there’s Morgan Stanley and the disastrous Facebook IPO. And not to be outdone was the 2008 bailout of Wall Street banks with taxpayer (your) money. What you’re seeing now is a market that never found a true bottom back in 2008. For my money, Fidelity and Vanguard are at the top of the hill of investment firms, with all the others a distant—and I mean real distant—second, third, etc. When it comes to choosing a custodian for your money, there should be no … [Read more...]
Be Fully Loaded for Retirement
If you’re thinking about retirement, make sure you’ve got a plan to get out of debt. The best case scenario would be to retire without any debt and to keep it that way. If you’re still working and you have debt, then try to work it down to nothing if you can. Once you retire, getting out of debt is a daunting task. Believe me when I tell you that unexpected costs come up and you end up spending more than you had hoped to spend. “I worked my whole life for this” seems to justify a lot of expenses in early retirement. If you do find you’re struggling to get out of debt and you’re already … [Read more...]
Retirement No Time for Whipsaw Portfolio Volatility
A basic understanding of the arithmetic of portfolio losses can help you become a more comfortable confident investor. Our chart of the arithmetic of portfolio losses shows investors what returns they’ll need to make up for portfolio losses. The horizontal axis shows the assumed portfolio loss incurred. The vertical axis shows the portfolio gain required to break even. … [Read more...]
A Treasured State
You want to stretch your dollars like silly putty when you’re retired. It’s the name of the game. And you want to be able to have some fun while you’re at it. One place where you can do both is Montana. SmartMoney’s “Retire Here, Not There: Montana” gives you a good starter on the state. Here’s an excerpt on Bozeman (read the whole article here): The first thing Bozeman has going for it: Its proximity to Yellowstone, only 90 miles to the South. (In sparse Montana, 90 miles is considered “down the road.”) But there are many other, more local charms. The town, which sits in the Gallatin … [Read more...]
A Forgotten Truth about Money
In a scene from the movie Moneyball, Scott Hatteberg is asked to play first base for the Oakland A’s and responds, “I’ve only ever played catcher.” GM Billy Beane (Brad Pitt) tells him, “It’s not that hard, Scott. Tell him, Wash.” Ron Washington responds, “It’s incredibly hard.” Saving money and investing are incredibly hard. You have to save until it hurts. Then you need to contribute to your IRA. But the more money you save, the more money you have to compound—which can be a lot of fun. So keep saving. The grim reality is that we have a nation of non-savers. The savings rate is … [Read more...]
Outliving Your Money
In this 0%-interest-rate environment, public pensions like Rhode Island’s are using an assumed rate of return of 7.5%. If and when that estimate goes unmet, it’s up to taxpayers to make up the difference. It’s preposterous that public pensions are assuming a 7.5% rate of return. The only way they’ll meet their mark is to take on more risk. That’s a bad four-letter word for any investor—never mind retirees. Money managers will attempt to meet their hurdle with other people’s money. But they have no skin in the game, so why not swing for the fences? In the private sector, the idea of … [Read more...]
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