The past several years have given active investment managers plenty of opportunities to show that they can add value to the investment process. Recent studies have shown that individual stocks have become much more volatile than in the past, giving active managers a chance to demonstrate their stock-picking skills by picking winners and avoiding losers. In addition, large up and […]
Year: 2002
Want to retire? Save until it hurts
The stock market boom of the 1990s did a great disservice to the average retirement investor: it made her feel that big stock returns were the key to retiring in style. From 1990 through 1999, big American stocks grew by an average of 18.2% per year, based on the Standard & Poor’s 500 stock index. A $50,000 investment in the […]
How to conquer your own investment biases
Believe it or not, all investors are not entirely rational. Well, that doesn’t seem so hard to believe. But understanding common patterns of investor irrationality may help you become a better investor. The Nobel Prize committee recently added some weight to this by awarding the economics prize to two college professors in the United States who have been pioneers in […]
Exxon Mobil promotes investment indexing
Exxon Mobil has made a bold move in its new 401k savings plan for employees. The company has announced that it will jettison all actively managed mutual fund choices next year in favor of a roster of indexed mutual funds. The company’s public announcement of the change, along with communications to employees, echoes the findings of academic studies that show […]
Client Letter – Q3 2002
The 2000-2002 bear market, which has lasted over two years, has scared many investors. The market’s steep declines are scary, but a long-term view can ease some of your anxiety. There is no question that the market can be very risky in the short run. That is why you should never invest money in the stock market that has a […]
Chasing hot mutual funds is a losing proposition
The returns earned by mutual funds may not be the same as those earned by the investors who buy them. A recent study by a university professor and two public foundation researchers indicates that mutual fund investors may have earned much less than the returns reported by the funds. The study, recently reported in Money magazine, showed that money usually […]
Bonds have a place in your portfolio
Investors have poured money into the bond market this year as they have watched their stock holdings vaporize. The latest mutual fund statistics show that investors are selling more shares of stock funds than they are buying, while at the same time throwing billions into bond funds. Should you do the same? Maybe, but not for the same reason the […]
Average rebounds from down markets are swift
Scared investors have a tendency to duck and cover when the stock market experiences a significant decline. The temptation is strong to hide money in fixed-rate investments and to wait the decline out. The trouble with this strategy is that investors who don’t have perfect foresight run the risk of missing out on the relatively swift recoveries that market makes. […]
The big bear strikes—now what?
“Things are different this time. Markets can continue to go up, despite stock valuations that have no rational relation to corporate earnings.” That’s what some of the experts were saying early in 2000. By now it is hard to find anyone who has not had those notions pounded out of them by what almost became the second-worst bear market of this century. […]
Foreign investing adds vital diversification
Through the late 1990s American investors liked to stick close to home. They were well rewarded for doing so—the Standard & Poor’s 500 index returned 16.8% on average yearly, while the Morgan Stanley EAFE Index, a gauge of large foreign stocks, had an average annual return of just 8.8% per year. But that is history. It is time for rational […]
