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 […]
Client Letter – Q4 2011
Any investor should be willing to admit 2011 was a pretty crazy year for the markets. We were churned through the year by a weather and nuclear disaster in Japan, a deadlock over finances in Congress that led to a downgrade of U.S. debt, and a major crisis in Europe that threatened to blow apart the European Union and end […]
Famed mutual fund manager quits after fund ends its streak
He was described as “one of the greatest investors of our time” by Fortune magazine in 2006. His record of beating the Standard & Poor’s 500 Index for 15 years from 1991 through 2005 is unmatched. And yet his mutual fund—Legg Mason Value Trust—suffered poor returns over subsequent years, landing him in the bottom of the pack in 2010 out of 1,187 […]
Optimism from a top market observer
As the world’s stock markets took a vicious tumble in late summer and early fall, one of the market’s most prescient observers issued a warning: don’t sell now. Burton Malkiel, economics professor at Princeton and author of “A Random Walk Down Wall Street,” wrote an editorial in the Wall Street Journal urging investors to ignore the market’s recent trends and to focus on […]