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…
What’s the Relationship Between Oil Prices & The Stock Market?
Oil prices are down nearly 20% this year. This has hurt energy stocks, as the sector off around 5% on the year versus a 7% gain in the S&P 500. At one point the energy sector was down nearly 25% from the highs reached earlier this year.
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…
When Are Value and Growth Going to Matter Again?
Generally, investing in different factors will give you a diversification benefit because certain styles tend to perform differently depending on where we are in the market or economic cycle. As with most investing rules of thumb, you can usually only bank on this relationship working out most of the time, not always.
Don’t Take This Personally
“I wasn’t unlucky, I got outplayed. I got outplayed that time. But I know I’m good enough to sit at that table.” – Mike McD, Rounders With the wild swings in the markets lately, it makes sense that investors are getting nervous. But it becomes a larger issue when you start to take the market’s…
Lies Investors Tell Themselves
“The reason I talk to myself is because I’m the only one whose answers I accept.” – George Carlin Hedge Fund manager Dan Loeb had this to say about a recent two month stretch of terrible performance (via Business Insider): …there’s just an incredible amount of uncertainty in the country both in regards to the…
