How the Markets Tempt Us Into Making Mistakes

Last week I looked at some of the options available to bond investors in a low rate world. I showed that subsequent returns over the next decade tend to track the current interest rate level very closely. Here’s that graph again from the Wall Street Journal:

Fixing the 401(k) Plan

“We’ll begin with the obvious: about 80% of all mutual funds could shut their doors today and not be missed.” – David Snowball

An Opportunity in Precious Metals Stocks?

“It [precious metals stocks] has bone-crushing volatility.” – William Bernstein If there’s been a worse place to be as an investor over the past few years than precious metals stocks then I haven’t found it. This year a diversified basket of these metals and mining companies is down around 16% but over the past three…

The Mutual Fund Observer’s Asset Allocation

Asset allocation is the most important investing decision that rarely gets much discussion. Sure, investors are constantly talking about going all-in or all-out between stocks and cash, but that’s not really asset allocation, that’s portfolio suicide.

The Hardest Part

Research Affiliates has a useful new online tool that allows investors to play around with expected risk and return statistics for a number of different markets. You can sort by asset class, country or region. Here’s one that shows the 10 year real expected returns for a handful of asset classes: You should notice an…

Managing Someone Else’s Emotions

“Financial advisors frame themselves as investment managers, providers of “beat-the-market” pills, when, in truth, they are mostly managers of investors.” – Meir Statman In my opinion, managing your emotions is by far the most important aspect of managing money. For a number of reasons – time, lack of expertise or lack of willpower – it…

Words & Phrases That Should Be Banished From Finance

Financial planner extraordinaire Michael Kitces had a great post last week on some words and phrases that need to be banished from retirement planning. A few examples Kitces used: Banish retirement income in favor of retirement cash flows. Banish retirement in favor financial independence. This got me thinking about some of the other words and…

GLD’s Fall From Grace

In August of 2011, the Gold ETF (GLD) surpassed the S&P 500 SPDR ETF (SPY) as the largest exchange-traded fund in terms of assets. Since then, the investment performance of these two funds tells how out of control things got for gold, as the SPY is up almost 60% while GLD is down nearly 25%….

What’s An Investor To Do About Bonds?

Most investors spend their time worrying about the stock market, but the bond market is in a fascinating place right now. Interest rates are low, but retirees and risk averse investors need sources of income and a less volatile ride than the stock market provides.Everyone seems to want rates to rise, but it’s just not…