Category: Investment

Securities Trading Is Becoming More Efficient

You may have observed that when you sell most mutual funds before the end of trading on any given day (1 PM Pacific Time), the cash typically shows up in your account the next trading day.  This is known as a one-day trade settlement cycle. When you buy funds, the shares appear in your account…
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Subprime Auto Loans Reach New Highs

Remember the billions of dollars of poorly-vetted mortgage-backed securities (MBS) that helped destroy Lehman Brothers and numerous banks (not to mention the world economy) in 2008? This time it’s auto loan-backed securities (ABS) that are setting records.  According to Bloomberg Businessweek, $26 billion in subprime ABS bonds were sold in 2016, surpassing the peak reached…
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How To Worry Less About Your Investments

I don’t suppose worrying is ever a good idea.  If there’s something in your life that you are concerned about, and you have the ability to change it, then you can (and should) do so.  If you have no control over it, worrying about it won’t improve anything and might even negatively impact your health. …
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Which Is Better: Bad Advice or No Advice?

Did you know that there are two different standards for investment advice depending on who provides it?  Advisors (or salespeople) at  brokerage or insurance companies are legally allowed to recommend an investment that may cost you more than alternative investments (thus providing them with more income) and that may not meet your risk or return…
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Understand The Data You Use for Investing (Part 2)

In my last post I demonstrated the importance of understanding how data is presented when comparing the performance of different investments.  When utilizing a cumulative performance chart, the key takeaway was that the starting point has a significant impact on the perceived results.  In our example, we compared the Dow Jones Total Stock Market US…
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Understand The Data You Use for Investing (Part 1)

I was having a discussion the other day with someone about investing in international equities.  Her belief was that international stocks have significantly underperformed U.S. stocks for a long time, and therefore she did not see any value in adding them to her portfolio.  As proof, she cited the following chart from the Wall Street…
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How Much Would You Pay For Promises?

ETFGI, an independent research firm focused on the global Exchange Traded Product (ETP) industry, reported that as of the end of Q1 2017 global ETP assets (which include ETFs) exceeded global hedge fund assets by over $800 billion. This is a good thing.  Mostly because it means hedge fund participation over the last two years…
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New Study: Picking Stocks Is a Losing Bet

Here’s a simple question: which asset class has better historical returns, stocks or one-month U.S. treasury bills?  That’s pretty much a no-brainer.  Most anyone would tell you the answer is stocks.  And they’d be right.  Since 1926 treasury bills have returned a paltry 3.5% annually on average, vs. over 10% for the S&P 500. That’s…
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Beware of Fake News When Investing

The concept of knowledge has recently undergone a radical change, with no less a personage than our new president and his cohorts attempting to legitimize what one of them has referred to as “alternative facts.”  Notwithstanding the societal consequences of government leaders making decisions based on false information, fake news can be especially problematic when making…
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The Impact Of Fed Rate Hikes (Part 2)

In Part 1 of this posting, I talked about how the government’s monetary policy is executed through the Fed to modify interest rates.  To recap: the Fed cannot control interest rates; it can only influence them, and realistically speaking only short-term rates at that.  In order to keep long-term rates low to stimulate the economy…
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