Consider Your Tolerance for Risk Before Abandoning Bonds

Posted on July 16, 2015 | Investor Update

Investor-Update

The cover of this week’s Barron’s reads “Trouble Ahead for Bond Funds.” It refers to an article discussing the downside of holding bond funds in the current environment. Specifically, the article discusses the risk of a decline in prices should interest rates rise.

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Historical Similarities Are Not Guides for China and Greece

Posted on July 9, 2015 | Investor Update

Investor-Update

This summer has not been kind to the Chinese markets. Since mid-June, nearly 30% of the market capitalization of Chinese stocks has vanished into the ether. (The Shanghai Stock Exchange Composite is down by about 28% since June 12, 2015.) Reuters says trading halts have been placed on about 1,500 stocks listed on the Shanghai and Shenzhen exchanges. To put this number in perspective, the value of these companies equates to about half of the Chinese market.

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My Notes From the Morningstar Investment Conference

Posted on July 2, 2015 | Investor Update

Investor-Update

Last week, I attended Morningstar’s annual Investment Conference. Attended primarily by financial advisers, the conference is notable for both its size and its mutual fund focus (as many of the speakers work for mutual fund companies). This week, I’ll share some of my notes and observations. In future issues of the AAII Journal, there will be transcripts of interviews with managers of a top-performing large-cap fund and of a frontier markets fund.

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I’m Creating a New Stock Strategy

Posted on June 25, 2015 | Investor Update

Investor-Update

I’ve been working on a new stock strategy. I’m focusing on the screen first—the method for identifying potential candidates—with plans to establish the sell rules afterward. This is the first time I’ve created a new personal strategy, as opposed to revising an existing one, in several years. Though I’m not creating it entirely from scratch, it is a new strategy as opposed to simply a revision. As such, the process is offering insights in and of itself.

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401(K) Plan Outflows Exceed Contributions as Baby Boomers Retire

Posted on June 18, 2015 | Investor Update

Investor-Update

The investment industry reached a generational milestone. The Wall Street Journal says withdrawals from 401(k) plans exceeded contributions in 2013, the latest year complete data is available for. The shift ends of streak of expansion that had lasted decades.

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Apple Is Separating Your Mind From Your Wallet

Posted on June 11, 2015 | Investor Update

Investor-Update

It is getting to be too easy to transact. Advances in technology are reducing the amount of effort needed to buy goods and services, transfer cash and sell securities. An updated Apple Pay may even figure out which card gives you the best reward at a given store or restaurant, according to NPR’s Marketplace. For those familiar with behavioral finance, this evolution is worrisome.

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Signs of a Sequel Playing Out for the Bond Market

Posted on June 4, 2015 | Investor Update

Investor-Update

Yields on the benchmark 10-year Treasury note jumped by 27 basis points (0.27%) over the first three days of this week. Driehaus Capital says this was only the second such three-day spike since the fall of 2011. Speculation about the timing of the first interest rate hike by the Federal Reserve and a rise in European bond yields are both contributing factors.

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Making Buy and Hold Work

Posted on May 28, 2015 | Investor Update

Investor-Update

Now that we are nearing summertime, some of the podcasts I regularly listen to are airing rebroadcasts. In preparation for taking some time off (I’ll be back in the office next week), I took a look at my past Investor Update commentaries to see if there was an old one worthy of a “rebroadcast.” In the process, I came across this one from August 5, 2010, about portfolio diversification that I think remains very valid today (after a few minor updates were made.)

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Unusually High Neutral Sentiment Often Followed by Good Returns

Posted on May 21, 2015 | Investor Update

Investor-Update

Last year, I conducted an updated analysis of our weekly Sentiment Survey to determine if the contrarian link between sentiment and market direction still existed if an investor only used the data available at a given point of time. In other words, I wanted to see what the results looked like if the analysis was done without any hindsight.

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Measuring Pain Relative to Gain

Posted on May 14, 2015 | Investor Update

Investor-Update

Wall Street defines risk as volatility. The more a fund or portfolio fluctuates in value, the riskier it is deemed. The vast majority of individual investors define risk differently. Individual investors, in aggregate, define risk as the chance of losing money.

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