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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Valuations Are Higher, but So Are Margins

Posted on May 7, 2015 | Investor Update

Investor-Update

Median price-earnings and price-to-sales ratios are currently higher now than they were near the height of the last two bull markets. Though this may seemingly be a reason for caution, there are underlying factors to consider before making a judgment about their significance.

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A Dot-Com Crashes After the NASDAQ Sets a New High

Posted on April 30, 2015 | Investor Update

Investor-Update

It was ironic to see Twitter (TWTR) incur a large price drop so soon after the NASDAQ set its first record high since the dot-com bubble. Shares of the social media company fell by more than 18% on Tuesday and fell further on Wednesday following a leaked earnings announcement, disappointing first-quarter revenues and lowered guidance. It was a sequence of events that supported Mark Twain’s supposed observation of history rhyming.

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Wealth and Spending Affect the Success of the 4% Rule

Posted on April 23, 2015 | Investor Update

Investor-Update

The success or failure of adhering to the 4% rule depends on a both a retiree’s wealth and consumption. The rule, developed by William Bengen, calls for withdrawing 4% from savings at the start of retirement and then adjusting the amount upward each year in response to inflation. Accounting firm PricewaterhouseCoopers (PwC) says the rule may only work for affluent households.

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Buck Conventional Wisdom When Taking Retirement Withdrawals

Posted on April 16, 2015 | Investor Update

Investor-Update

You can extend how long your retirement savings last by bucking the conventional wisdom on how to take withdrawals. Even if you are not in retirement yet, you will want to pay attention because the strategy may impact your decisions about what retirement savings accounts to maintain and contribute to.

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The Growing Popularity of Index Funds

Posted on April 9, 2015 | Investor Update

Investor-Update

Is there too much money going into index funds?

This is a common question I have heard raised at conferences and other industry events. It’s being raised because of the growth of Vanguard and, secondarily, the growth of exchange-traded fund.

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The Bond Strategies Used by Advisers

Posted on April 2, 2015 | Investor Update

Investor-Update

While much conversation has focused on the timing of the first interest rate hike, there has been considerably less discussion about what investors should do with their bond holdings. Even in the face of an uncertain outlook for interest rates, bonds can play a role as a diversifying agent and a source of portfolio income. The $64,000 question is: What fixed-income strategy makes sense right now?

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200-Point Moves in the Dow Are No Longer Significant

Posted on March 26, 2015 | Investor Update

Investor-Update

A quick question: Is a 200-point move in the Dow Jones industrial average a big change or not?

If you are like many people, your intuition is to say “yes, it is” (especially if you ignored the headline of this week’s commentary). Until fairly recently, a 200-point change was a big move. But, then the bull kept running. And running. With each upward move, the absolute value of the Dow rose. As the Dow rose, the importance of a 200-point change decreased.

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