During the past quarter, we have witnessed an amazing 3-month rebound, in stark contrast to what happened in the prior quarter. In fact, the month of September will go down in history as the strongest September since 1939. The following chart shows the 3-month, 5-year, and 10-year performance of many DFA funds (representing different asset classes) compared to the S&P […]
Year: 2010
Investing based on recent trends is an invitation to disappointment
As decision makers we spend a lot of time wallowing in the past. We project recent trends forward, expecting things will pretty much go on as they have been. Unfortunately, this tendency, termed “recency bias” by cognitive psychology, often does not give you a good guide to the future. Nowhere is this more true than in the investment markets. Here […]
Offered a high yield? Run the other way
Low interest rates at the bank and scary volatility in investment markets has created a market for shady high yield investment programs (HYIPs) that prey on unsophisticated investors, warns the Financial Industry Regulatory Authority, which regulates U.S.securities firms. If you or someone you know are offered a high yield investment that claims to provide safety, liquidity, and above-market interest rates, […]
Investors expect too much of brokers and insurance agents
Three of four investors have unrealistic expectations of the level of care that financial advisors at brokerage firms are required to give. Seventy-six percent of investors said “financial advisors” at firms such as Merrill Lynch and UBS should put the client’s interests first, found a survey conducted by several consumer organizations. However, brokers do not have a fiduciary duty to […]
With interest rates so low, where do you put cash now?
Savers have been frustrated by super-low short-term interest rates since the 2008 financial crisis forced central banks worldwide to slash rates. Despite forecasts that government stimulus spending and rising national deficits would spark inflation and higher rates, inflation and interest rates have remained stubbornly low. What is a saver who wants a decent interest rate to do? The chart of […]
It’s a great time to buy stocks, says noted financial historian
One of this country’s preeminent financial economists and historians believes the stock market is a great buy today. In fact, when compared to similar periods over the last 200 years of stock market history, all of the unsettling events of recent years have contributed to the market’s positive prospects, says Jeremy J. Siegel of the Wharton School and author of […]
Client Letter – Q2 2010
During the past quarter, global stock markets ended their year-long rally and experienced their first major correction since the crash of 2008. Despite strong corporate earnings reports, global investors reacted to the European debacle, the Gulf oil spill, Goldman’s troubles with the SEC, and worries about a possible double-dip recession. The following chart shows the 3-month, 5-year, and 10-year performance […]
‘Flash crash’ of May 6 exposes the dangers of ETF trading
On May 6, the stock market suffered a massive drop in stock prices that took the Dow Jones Industrial Average down by 1,000 points in a matter of minutes before recovering much of the loss. Although market participants and federal regulators still cannot explain what happened, some popular new investment vehicles’ exchange traded funds, or ETFs—have lost a bit of […]
REITS provide portfolio diversification
Investors who own a typical stock and bond portfolio don’t have to go too far to find a handy diversifier. Shares of real estate investment trusts are traded on the major exchanges just like any other stock. However, unlike other stocks that represent ownership of companies, REITS offer ownership in commercial real estate. They give shareholders access to a steady […]
How to succeed in retirement: Stocks and 4 percent withdrawals
How to invest a nest egg and what is a safe withdrawal rate are the two biggest questions for anyone in or near retirement. Although the answers are far from simple, a lot of recent academic research continues to shed light and offer guidance to the perplexed. The uncertainties of future inflation, investment market returns, and individual life expectancy can […]
