The debate between actively and passively managed equity mutual funds has raged for decades. My position is that the only way that actively managed stock funds can outperform is either by fund managers picking winning stocks in advance or by timing market ups and downs, which requires the consistent ability to successfully predict the future.…
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“Are stocks overvalued right now?” is probably the second most common question I am asked these days. In the last year and a half the Dow reached a new high over 90 times. It’s understandable that investors are looking for some indicator to tell them in advance whether or not stocks are too expensive to…
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We’ve all heard the stories about the Silicon Valley barber who became a millionaire by listening to and investing in the companies of the executives whose hair he cut. Or about the thousands of employees during the early days at Microsoft who became millionaires simply by accumulating their stock options as the company’s stock price…
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This is a question I get quite frequently from clients, friends, relatives, and even strangers that I meet at seminars. When I inquire as to what prompted such a question, the responses run the gamut from “I read that stocks are overpriced right now” to “The loud-talking guy on TV said so.” In this post…
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In a recent article in Morningstar, John Rekenthaler talked about how Ameriprise and other brokerages/custodians/advisors offer funds based on how much revenue they get from the fund companies. These so-called revenue-sharing agreements, he argues, are a way for the brokerages to hide the income they are actually earning from the advice they are providing to…
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Risk is a commonly used term when it comes to investing, and its importance cannot be overstated. While we cannot control the returns that we get from our investments, we can and should manage the risk very carefully. As I have written before (Don’t Overlook the Risk of your Investments), there are many different types…
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An article with the provocative title “Why 60/40 Portfolios Are Downright Dangerous Today” caught my eye the other day. It was in a financial planning trade publication targeted to financial advisors and asserted the following: Bonds and stocks used to be negatively correlated with each other but no longer are. Advisors are not making enough…
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What prompted the writing of this post was a radio commercial I heard the other morning while commuting to work. It was from some real estate firm that promised to teach me how to buy, hold, and sell properties with no money down and no risk. Imagine that: no risk! How could anyone turn down…
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The media reported that the Dow’s plunge of 1100 points on Monday was the biggest point drop in history. While that sounds scary, keep in mind that media reports are intended to be dramatic. Put in broader perspective, the percentage drop (which is the more important measure) was 4.6%. That’s the biggest single day loss…
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Pardon me for paraphrasing a catch phrase from a ubiquitously marketed credit card. But were you aware that you actually have a lot of flexibility in terms of the investments you can choose to put into an IRA? Besides stocks, bonds, mutual funds, and ETFs, you can invest in real estate, gold bullion, and in…
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