The Baby Boom generation born between 1946 and 1964 has dominated investment markets since the 1980s. They struggled for an economic start during the repeated recessions between 1973 and 1982, but then helped to propel an 18-year bull market as they reached their peak earnings power in the 1990s. Now some market observers worry that the Baby Boomers are dragging down […]
2012: The Year It Didn’t Happen
Judging by the headlines in the financial press, investors spent much of the past year anxiously awaiting one calamity after another that failed to occur. The plunge off the so-called fiscal cliff was averted. The euro zone did not fall apart. China’s economy and stock market did not crash. The bond market did not implode. The re-election of President Barack […]
The Top Ten Money Excuses
Human beings have an astounding facility for self-deception when it comes to our own money. We tend to rationalize our own fears. So instead of just recognizing how we feel and reflecting on the thoughts that creates, we cut out the middle man and construct the façade of a logical-sounding argument over a vague feeling. These arguments are often elaborate, […]
Client Letter – Q3 2012
During the past quarter, the world-wide equity markets performed fairly well, helping our 1-year returns look very strong. The chart below shows the 3-month, 1-year, and 10-year performance of many DFA funds (representing different asset classes) compared to the S&P 500 Index: Market Returns for the period ending September 30, 2012 DFA Fund / Index 3 Month Return 1 Year Return […]
Another Wall of Worry
Stock prices rallied sharply around the world in the third quarter, with forty-two out of forty-five countries tracked by MSCI showing positive returns in US dollar terms. Total return exceeded 10% in nineteen different markets, while Ireland, Japan, and Morocco registered minor losses. For the twelve-month period ending September 30, 2012, forty markets had positive returns, with six countries—including the […]
Age may bring wisdom but not when it comes to your finances
As we age and gain experience we should get wiser, right? We’ve learned a lot from our mistakes and those of others and we gain a sense of calm and deliberation that we may not have had in our younger years. When it comes to finances this may be true only up to a point, the latest cognitive research shows. Research […]
Balanced portfolios are beating the hedge funds so far this year
The investment climate has been almost manic over the last year, with wild swings in global markets due to economic news and the financial crisis in Europe. At times like these some in the investment world argue that passive investors who sit on a diversified portfolio will get whipsawed. Instead, the argument goes, they should hand their money to an expert […]
Gold’s reputation as an inflation hedge is vastly overdone, study says
Gold has soared in popularity in recent years as a hedge against inflation and weak currencies. Unfortunately for the gold bugs, a new study shows it is neither. In fact, the only time period for which gold has served as an adequate inflation hedge was the last 2,000 years. Any holding of less than that did not hedge inflation, say investment […]
Do not go into retirement without addressing the risks
Retirement can be the most exciting and rewarding time of all, but, like any other stage in life, there are unique financial risks that need to be addressed. Longevity, inflation, health care needs, the death of a spouse, problems with living independently—all can affect a retiree’s quality of life. Changes in laws and social welfare programs can have dramatic effects on a […]
Knightmare on Wall Street
Question: Which of the following statements applies to last week’s stock market behavior? Computer errors at a major trading firm generated millions of faulty trades, causing dramatic and puzzling price swings in dozens of stocks Wednesday morning. A New York Times columnist fumed that “Wall Street has created its own Frankenstein. The machines are now in charge.” Stocks on the fifty-two-week new […]