Volatilestock markets generate a peculiar type of celebrity known as the “perma-bear.” This is the highly negative forecaster who gets credited with calling a bear market before it starts. What you usually don’t get told is that he or she has been calling for a bear market for years without success. When their big chance finally comes, perma-bears milk it […]
The Death of Equities, Revisited
A recent article appearing in the Financial Times caught our eye—or perhaps we should say ear. At first glance it was unremarkable—just one among dozens of recent think pieces suggesting that investors were losing interest in stocks as markets around the world continued to stagnate. But the tone of the article sounded remarkably familiar. We dug out our copy of the “Death […]
Is this the last generation to use 401ks?
The 401k retirement savings account offered by employers has become ubiquitous over the last 30 years. But some retirement planning experts predict that 401ks will be overtaken by a new form of retirement savings in the future. The reason is simple: the accounts don’t help lower income employees who lack the ability to save for retirement, and they put each […]
Investors are sitting on wads of cash just at the wrong time
The latest consumer inflation rate was clocked at 2.3 percent in April. Sounds pretty benign, doesn’t it? Well it isn’t if you are keeping large sums of money in the bank at today’s interest rates. In fact, “safe” money in the bank is being subject to erosion just as surely as any stock market decline might affect your investment portfolio. […]
Stocks are scary to own, but they are your best inflation fighters
Individual investors have fled the stock market in droves ever since the great bear market of 2008. The latest statistics show investors selling more stock mutual funds than they buy and putting much of the proceeds into bond funds. Meanwhile market volatility has increased again as another round of scary financial headlines from Europe have pushed prices down sharply in […]
2012 NAPFA National Conference Highlights
I am just flying home from Chicago, where I had the opportunity to spend the past week with my fee-only advisor colleagues at the 2012 NAPFA National Conference. I had a great time and learned a lot too. Here are some of the highlights: William Strauss, senior economist with the Federal Reserve Bank of Chicago, said that while “growth of […]
A race against hedge funds puts Warren Buffett ahead
Billionaire investor Warren Buffett is running ahead on a bet with two hedge fund managers that the Standard & Poor’s 500 Index would beat an index of hedge funds. Buffett, whose flagship Berkshire Hathaway was added to the S&P index in 2010, contends that the active money management and high fees associated with hedge funds cannot beat the market. His […]
Global bonds and stocks are the answers for 401k savers
Employees who contribute to their 401k and other retirement plans are missing the boat when it comes to worldwide investment diversification, says OppenheimerFunds. Its recent survey of 1,000 investors found a distinct “home market” bias among employees investing for retirement. It says employees routinely misunderstood the risks and rewards of investing overseas in international stocks and bonds. Many thought the […]
Passive investors beat active managers in ten-year scorecard
Indexed and passive investing have gotten a bad rap from active managers out to protect their turf and the high fees they earn from buying and selling securities. Passive managers buy a portfolio that matches a market index or that covers an entire asset class. Plenty of academic research suggests that they will do better than the average active investor […]
Client Letter – Q1 2012
During the past quarter, U.S. and international stocks performed exceptionally well, with international and emerging markets doing the best (as they have during the last ten years). Ironically, U.S. stocks have outperformed international stocks during the last one year and five year periods. The following chart shows the 3-month, 5-year, and 10-year performance of many DFA funds (representing different asset […]
