An Easy Way to Boost Returns: Reduce Your Costs

Posted on March 19, 2015 | Investor Update

Investor-Update

Every dollar you do not spend on expenses is a dollar you get to keep and grow. It’s basic math and an easy way to boost your returns. Each dollar spent on expenses flows out of your portfolio, never to be seen again. Limiting the outflow of those dollars gives you a larger amount of capital to grow and/or earn income on.

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Don’t Judge a Bull Market by Its Age

Posted on March 12, 2015 | Investor Update

Investor-Update
The bull market celebrated its sixth birthday on Monday. The milestone put the rally in an unusual club. Since World War II, only three other bull markets made it to year six, according to Sam Stovall at S&P Capital IQ. Just two made it to year seven: June 1949 through August 1956 and October 1990 through March 2000. Seven other bull markets ended before year six.

I would refrain from jumping to any conclusions based on these numbers. Stovall says previous post-WWII bull markets have lasted between 1.1 years (May 1947 through June 1948) and 9.5 years (October 1990 through March 2000). Plus, the sample size is small, at just 11 sustained rallies.

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Lessons from Buffett’s 50 Years at Berkshire-Hathaway

Posted on March 5, 2015 | Investor Update

Investor-Update
I want to personally invite you to our 2015 Investor Conference, which will be held this November in Las Vegas. This conference regularly sells out. If you can attend, you will be treated to many great presentations. Among the speakers at this year’s conference are Jack Ablin of BMO, Larry Swedroe of the Bam Alliance and Christine Benz of Morningstar. I hope to see you there!

Warren Buffett’s annual letter to Berkshire-Hathaway (BRK.B) shareholders is on my must-read list, and I suggest adding it to yours as well. The letter always provides investing insights on Buffett’s folksy but outspoken manner. This year’s letter included special commentary from both Buffett and his partner Charlie Munger.

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A Reignited Debate About Protecting Investors

Posted on February 26, 2015 | Investor Update

Investor-Update
Two events in Washington, D.C., this week reignited the debate about the responsibilities of those giving investment advice or operating retirement plans. The outcomes could influence what standards are used to determine if investors’ interests are being placed first.

On Monday, President Obama proposed tougher standards on brokers handling retirement funds. He called for requiring “retirement advisers to put their client’s best interest first, by expanding the types of retirement investment advice subject to ERISA.” ERISA is the Employee Retirement Income Security Act and expanding it would be mean stricter standards for brokers. Among the stricter standards that are part of Obama’s proposal is making advisers “abide by a ‘fiduciary’ standard.”

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Winning the Game of Finance

Posted on February 19, 2015 | Investor Update

Investor-Update
Financial management is, in part, a game. It comes not only with certain rules, both also with incentives and penalties. There are rewards for making astute choices, though doing so can require both spending time with the “rulebook” and thinking thorough the various options.

My wife and I going through this right now with a vacation we’re planning. I have miles on American Airlines and she has a large number of points on a credit card. In trying to figure out the best way to use both, one thing has become clear: We need to reevaluate our choices of credit cards. If you truly understand your spending patterns (meaning the types of businesses you mostly spend money at), it is possible to more efficiently make use of credit card rewards and thereby boost your savings rate. What I haven’t done yet—and doing so will require some legwork—is to figure out whether it’s better to get airline miles or cash back. I do think the answer partially depends on how much one travels. Of course, the big key is to never carry a balance from one billing cycle to the next. (For those who do carry credit card debt, balance transfer offers can lessen, but not eliminate, the penalty of doing so.)

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The Mutual Fund Traits That Matter

Posted on February 12, 2015 | Investor Update

Investor-Update
The great thing about our annual mutual fund guide is the large number of funds it covers and the significant amount of information it provides about each fund. As useful as this data is, it can admittedly be overwhelming to a person without a plan for identifying a new fund (or funds) to invest in. Fortunately, this does not have to be the case. I’m going to walk you through the basic steps you need to follow when selecting a new mutual fund. This advice is, in large part, also applicable to exchange-traded funds (ETFs) and closed-end funds (CEFs).

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Euro Weakness Has Been a Drag

Posted on February 5, 2015 | Investor Update

Investor-Update
Two recurrent words in fourth-quarter earnings releases have been “currency translation.” Currency translation is the conversion of revenues, expenses and earnings realized in a foreign currency into U.S. dollars for reporting purposes. Depending on exchange rates, currency translations can be either a positive or a negative.

Last quarter, the euro was a notable negative. The euro fell from than $1.263 per dollar to about $1.216 per dollar. As the quarter progressed, each dollar of sales realized in Europe was worth less and less when converted to the greenback.

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Indicators for Assessing the Market’s Risks and Rewards

Posted on January 29, 2015 | Investor Update

Investor-Update
Though I don’t put much weight on forecasts and I invest for the long term, I do keep an eye on how attractive or risky the market appears to be. Partially, I do this because I work in the investment industry and am periodically asked what I think about the market. But I also do this because I think an awareness of the current market conditions can help with portfolio decisions.

None of this is about market timing. Market timing involves buying and selling securities based on what you think will happen. While I have spoken to some investors who say they avoided the last bear market, far more have told me that they have missed out on part or most of the current bull market out of fear about what they thought might happen. I don’t think investors, individual or institutional, should use market timing strategies, and the reason is simple: The future typically unfolds in ways we do not expect it to.

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Oil Shows the Folly of Forecasts

Posted on January 22, 2015 | Investor Update

Investor-Update
Whenever Mr. Market wants to change something, he can turn the dials pretty swiftly and cause prices to move significantly. The speed and the magnitude of the changes are often greater than many investors realize while the price adjustments are occurring.

Oil provides a good example. At the end of last June, oil traded at $105.37 per barrel. Over the next three months, the price declined to $91.16. Then, in the fourth quarter, oil plunged by more than 41% to $53.27 on December 31, 2014. Oil has continued to fall this month, trading at $46.50 per barrel today. Put another way, oil has fallen by 56% since the end of June and 49% during the 16-week span starting at the end of September.

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The Tools I Use for Managing My Finances

Posted on January 15, 2015 | Investor Update

Investor-Update
A change in TurboTax regarding Schedule D: Capital Gains and Losses gave me the inspiration for this week’s commentary. Since I’m switching tax software programs, you might appreciate me expanding the conversation from merely TurboTax to discussing the tools I use to manage my finances. None of what I am going to say should be construed as either being the best way or the only way to do it, but rather as just a method that works for me and food for thought about how you approach your personal process.

But, first a few words about TurboTax, since many of you likely use it. I’ve used TurboTax for possibly close to 20 years, and Quicken even longer. For as long as I can recall, Schedule D was included in the Deluxe version of TurboTax’s desktop software. Not anymore. Now taxpayers have to buy the more expensive Premium version. “This will be a surprise” is how a spokesman for Intuit described the change to Matt Krantz at USA Today.

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