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 […]
Client Letter – Q2 2002
The recent financial news would have you believe that the world financial markets are falling apart, and that the current bear market will probably be around for a while. In fact, the last two years have been a very dark time for U.S. large stocks. For example, the S&P 500 stock index—which is composed of U.S. large stocks—is down about […]
Indexing advantage is no longer debatable
Twenty-five years ago the concept of indexed investing was derided by professional investors as a path to mediocre investment returns. Why buy the market when you can beat the market? That was their argument. But one of the pioneers of retail mutual fund indexing, former Vanguard Group Chairman John C. Bogle, has had the last laugh. Index funds he launched […]
Market beaters may be just lucky
It all seems so easy: smart investment managers rise to the top. All an investor has to do is identify one of the geniuses who runs a portfolio that has been successful for a long period of time. By hitching his fortunes to that of the star investment manager, the investor will have a better chance of beating the stock […]
Turn losses into a valuable lesson
Did you lose money in stocks over the last 28 months? Don’t just fret over what’s happened; instead, learn some valuable lessons that will improve your future investment experience and returns. Bear markets like the one we’ve experienced are great teachers of basic investment lessons. Among them are: Diversification works. Investments return to the mean. You cannot outsmart the market. Safety in […]
Client Letter – Q1 2002
The two-year bear market has made a lot of investors wary of risk. Investors who thought nothing of buying the stock of a fledgling Internet company with no profits back in early 2000 are now slapping their money into bond mutual funds, certificates of deposit, and money market mutual funds. Despite low interest rates, money poured into bond mutual funds […]
Institutional mutual funds have an advantage
Many American investors by now are familiar with retail mutual funds. Popular names like Janus, Fidelity, and Vanguard are advertised widely and fill the portfolios of many investors. What many don’t know are their more refined cousins – institutional mutual funds. Where a retail mutual fund will take any investor who knocks on the door, an institutional fund accepts only […]
