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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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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