Did you get a big surprise when preparing your federal income tax return this year? If you were lucky and did not, just wait until next year: your time may be coming. The dreaded alternative minimum tax took a larger bite out of taxpayers’ wallets this year, costing an estimated $6,000 apiece for more than 2.9 million taxpayers. Next year, […]
Year: 2005
Hedge funds: There’s no free lunch
Ever since the big bear market of 2000-02, individual investors have been leery of the stock market. Still reeling from big losses and battered by scary headlines about the dollar’s decline, rising interest rates, and trade and budget deficits, they have flocked to “alternative” investments that promise big returns not tied to the stock market. Hedge funds have been the […]
Treat television financial ‘experts’ with caution
Paul Kangas, host of the Nightly Business Report, was interviewing New York City investment adviser Todd Eberhard in December 2001: Kangas: “What should we be buying?” Eberhard: “Well, we’re looking at some stocks which are coming out with very good numbers… right now. Examples would be a General Electric, which is trading at about $41 a share.” Kangas: “And also […]
Investors who want to prosper think long term
Live long and prosper,” Leonard Nimoys character Spock, from the original Star Trek, liked to say. Investors—especially the media-bombarded impatient types of today—should take that adage to heart, perhaps substituting the word “Invest” for the word “Live.” In an era of second-by-second market updates readily available on cable TV and the Internet, investors seem to be having trouble with the concept of […]
Going international helps retirees
The biggest question facing a retiree who wants to live partly off of an investment portfolio is this: Will the portfolio sustain my withdrawal rate, and keep up with inflation, throughout my retirement? Retirees don’t want to run out of money before they die. But they also want a reasonable income that isn’t devastated by inflation. Much has been written […]
Client Letter – Q1 2005
I hope you are enjoying the spring weather as much as I am! I just love watching the grass turn green and the flowers bloom. Just as nature goes through cycles, so do the investment markets. At the end of 2004, we had just finished two amazing years in the real estate and equity markets. So, it did not really […]
Retirement no longer means an end to working
When Social Security was put in place in the 1930s, the retirement age for full benefits was set at 65. That number was picked for a good reason: the majority of workers—worn out by a lifetime of manual labor—didn’t live much beyond that age, on average. Things are different today. The life expectancy of a woman age 65 is approaching […]
Beat the market? Don’t even bother
It has been 30 years since financial economists first theorized that beating the market is almost impossible. Since then, many studies and experiments have confirmed this hypothesis. And yet, every day, millions of investors—egged on by a Wall Street publicity machine eager to encourage frequent trading—believe they can pick winning investments. It doesn’t make sense, argues Burton G. Malkiel, the […]
Why investors are sold inferior funds
Ever wonder why your stockbroker or insurance agent was so insistent that you buy mutual funds from a specific fund family? It may have been because they were paid more to sell those funds. Your sales agent may have even gotten a free trip to the Caribbean for convincing you to invest. The practice is called revenue sharing or “pay […]
Active mutual funds trail the indexes once again
Yet another study comparing the returns of active and indexed mutual funds has named indexed funds as the clear winners. The study of active mutual funds showed that over a 10-year period ending in 2003, active funds underperformed their benchmark indexes by three to one. The poor results were not limited to large stocks, moreover: funds in every stock size […]
