It’s September; Set Your Expectations Accordingly

Posted on September 5, 2013 | Investor Update

We have now entered what is statistically the worse month of the year for the stock market: September. The S&P 500 has lost 1.12%, on average, in Septembers dating back to 1928, according to Merrill Lynch Wealth Management. September has also been the worst month of the year for the Nasdaq and the Russell 1000 since 1971 and 1979, respectively, according to Jeffrey Hirsch of the Stock Trader’s Almanac. In a recent post, Hirsch observed in post-election years going back to 1953 that “September is the third or fourth worst month depending on index.” He calculates average post-election year September losses of 0.9% for the Dow Jones industrial average, the S&P 500 and the NASDAQ. The Russell 2000 has lost 1.6% on average in post-election Septembers.

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Emerging Markets Are Out of Sync

Posted on August 29, 2013 | Investor Update

Correlations have not only declined among U.S. stocks, but they have also declined between U.S. stocks and their emerging market counterparts. While U.S. stocks have held onto most of their 2013 gains, emerging markets have struggled, with a funk emanating from some of them.

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Good News for Stock Pickers

Posted on August 22, 2013 | Investor Update

The decline in correlations has become a trending topic among stock market strategists. The monthly returns of individual U.S. stocks are diverging from the Russell 1,000 index. Depending on who you ask, this is either a positive occurrence for stock pickers or a sign that fund managers are becoming complacent.

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It’s Tougher to Find Bargains

Posted on August 15, 2013 | Investor Update

“The market is no longer cheap.” This is how we started our August AAII Dividend Investing newsletter. The S&P 500’s approximate 18% rise in price this year so far has boosted portfolio values, but made life difficult for value investors.

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Cash Is Costly Over the Long Term

Posted on August 8, 2013 | Investor Update

Many Americans believe “cash investments are the best way to invest money not needed for more than 10 years,” according to a new survey by Bankrate.com. More than one in four Americans (26%) favor cash as the best long-term investment, choosing it over real estate (23%), gold or other precious metals (16%), stocks (14%) and bonds (8%).

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Bond ETF Redemptions Encounter Liquidity Issues

Posted on August 1, 2013 | Investor Update

As if investors needed another eerie-sounding headline, the issue of bond liquidity has popped up. Recent articles in Reuters and Barron’s pointed to issues involving the exchange of bonds and ETF creation units. Though this may sound a like a technical concept, it’s one worth understanding.

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The Zombie-Like Stench of Precious Metal Funds

Posted on July 18, 2013 | Investor Update

Yesterday, I was handed an investment report entitled “Zombies!” The report by Harris Associates L.P. focused on interest rates, but it could well have focused on precious metal funds instead. Investors holding those funds will feel like their portfolios were afflicted by the same plight causing havoc in AMC’s hit show “The Walking Dead.”

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Think Twice Before Dumping Your Bond Fund

Posted on July 11, 2013 | Investor Update

Investors have been yanking their dollars out of bond mutual funds. An estimated $66.6 billion has been pulled over the past five weeks, according to the Investment Company Institute (ICI). This is more than eight times the amount pulled from domestic equity funds over the same period.

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Don’t Be Quick to Bail on Emerging Markets

Posted on July 4, 2013 | Investor Update

The first half of this year was not kind to emerging market stocks. The MSCI Emerging Markets index lost 9.4% on a total return basis during the first six months of 2013. Not only was it more than 23 percentage points worse than the S&P 500, it was also 13 percentage points worse than the MSCI-EAFE index, which includes troubled Europe. On the surface, two words come to mind: Not good.

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I Made a Mistake

Posted on June 27, 2013 | Investor Update

Since I am someone who does not like to trade frequently, it was unusual for me to place an order to sell a stock I bought last Friday, June 21, on Monday, June 24. Yet, this is exactly what I did to fix what turned out to be a mistake.

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