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Success Through Stupidity Avoidance
- Being a successful active investor requires a massive amount of time and work. If you don't enjoy it, why do it?
- The definition of active investing can include owning anything beyond a total stock market fund and total bond market fund.
- Generally, tracking an equity index for the equity portion of the portfolio is not going to be suitable for every market participant.
Downsizing = Empowerment
Jul. 3, 2014 • 34 Comments
- With the right planning, downsizing no longer has to mean an ugly one-bedroom condo someplace that no one wants want to live.
- Done with some thought and real planning, downsizing can be very empowering.
- Smart downsizing can be a total game-changer for an iffy portfolio.
Alternative Investments: The Right Expectations
Jul. 1, 2014 • 6 Comments
- The media and blogosphere are both picking up on the drag created by too much exposure to alternatives.
- The Journal reports that the average endowment had 16% allocated to domestic stocks, 18% to foreign stocks and 53% to alternatives in the three years ending June of 2013.
- The realistic hope for alternatives, when used in moderation, is that they will smooth out the ride in terms of reducing volatility at the times when clients need it most.
Why Do People Have Such Different Ideas About Retirement?
Jun. 27, 2014 • 52 Comments
- Friend A is the one exactly my age, wants to retire at 50, but doesn't think he will be able to.
- Friend B who is four years older than me wants to retire in general terms, but he says it will be a while.
- The point of this post is to try to create some context for disparate views that exist regarding financial matters.
Gundlach Likes Gold
- The purchasing power of $1 from the time the Federal Reserve was established in 1913.
- How much longer will the U.S. Dollar remain the reserve currency of the world?
- The U.S. dollar is well within the time frame where something could change.
Self-Sufficiency And Resourcefulness Over Complaining
Jun. 24, 2014 • 32 Comments
- Salon author Olen notes that the US is "on the verge of a retirement crisis," as living standards appear to be declining such that people won't have it better than their parents.
- Olen talks of blame pointed at individuals for not saving enough, but makes the argument that saving money has become too difficult for people on an economic basis.
- The opportunity to overcome all the obstacles cited by Olen exists, but requires the resourcefulness to learn how, stick to it and adapt to any surprises that come.
Your Portfolio Does Not Have To Be Perfect
Jun. 19, 2014 • 16 Comments
- He gets broad global equity exposure through minimum volatility funds, some REIT exposure, commodity exposure through a natural resources fund, three bond market segments and cash.
- Brett’s portfolio is of course similar to any portfolios we’ve looked at over the years; not unreasonably complex, can be constructed with ETFs and is unlikely to be ruinous.
- Whatever you end up with is obviously a combination of savings and growth of those savings from investing (the amount saved is far more within your control).
Nothing New Under The Sun
Jun. 17, 2014 • 9 Comments
- A reader left a long comment on one of our posts.
- You reasonably cite the current list of issues confronting the world and its capital markets, but from 30,000 feet none of these are new.
- Worrying about China is certain not new, before they were going to stop buying our debt, now it is some islands near Japan.
Is Generation X Really Up A Creek?
Jun. 11, 2014 • 15 Comments
- The pursuit of digging out from under has many paths, none of which should be expected to be easy but this is a challenge to solve individually.
- The solutions are endless and Gen X-ers are struggling, but fortunately they have the time to find the right answer for themselves.
- The industry might struggle if there is a gap between boomers and Gen Y that the X-ers do not fill.
Why The Glass Must Be Half Empty In Financial Planning
Jun. 10, 2014 • 4 Comments
- When planning for the positives you can oftentimes forget to plan for the unforeseen.
- The difference doesn’t mean financial plan failure versus financial plan success.
- If equities double over the next five years, or if equities go sideways was your financial plan successful in both outcomes?.
It's Never Time To Flee A Valid Strategy
- Jason Zweig noted that after several years of outperforming, dividend funds in general lagged behind the cap-weighted S&P 500 by 400bps in 2013, and are lagging a little bit behind this year.
- One crucial point is that there is no investment strategy that can be the best for all times.
- Once you and your clients accept that no strategy can be the best for all times, it becomes a little easier to remain disciplined.
Get The Beta Right
May. 29, 2014 • 6 Comments
- Equity beta, or equity volatility, is great on the way up, it’s on the way down that it is “bad”.
- Often the word patience is ascribed to the task of investing and that is relevant here. To chase yield is to be impatient.
- The task evolves into finding yield while still maintaining something close to fixed income beta.
Alts Probably, Moderation Definitely!
May. 15, 2014 • 3 Comments
- I have long been a believer in using alts in moderation as a way to manage a portfolio’s volatility.
- Dividing a small allocation to alts among several generally unrelated strategies will obviously insulate against a failure to execute in one part of the alts universe.
- And while I still would probably not go 20%, I would go from small to less-small as part of getting more defensive.
Hire Someone Or Go It Alone? Yes!
May. 7, 2014 • Comment!
- Do investors need an "ETF Strategist?".
- Should you manage your own money?
- An active manager will typically offer some sort of expectation, like trying to generate alpha.
No, Your Portfolio Should Not Have 20% In Gold And 30% In Cash
- James Rickards apparently believes that the end is nigh for the financial system.
- Suggestions for 20% allocations to gold sound great/look good when gold is going up and hurt on the way down, as was the case in 2013.
- As the stock market goes up most of the time, it makes sense for the portfolio to look at least similar to the stock market, more often than not.
Robo Advisors And Behavioral Finance
Apr. 21, 2014 • Comment!
- Behavioral finance is always interesting because our emotions are regularly a bigger impediment to long-term investing success than stock and/or fund selection.
- No guarantees with any strategy, but a systematic reduction of exposure while the market is minimally down will likely reduce the likelihood of panic after the market has dropped substantially.
- A huge part of what an advisor does is helping clients avoid or reduce behavioral mistakes that are so detrimental to long-term success.
Time To Get Real About Income Investing
Apr. 15, 2014 • 17 Comments
- Buying a bunch of long-dated treasuries is no longer a favorable one-way trade.
- The “innovative solution” theme is fascinating for hearing about what other people have done and because this forces people to learn more about themselves.
- As Altucher notes sometimes things go along as planned and hoped for but that when they don’t, you need a plan B.
Tiny Houses Can Help Grow A Huge Portfolio
Apr. 11, 2014 • 7 Comments
- The financial planning implication considers that a simpler lifestyle will in most instances be a less expensive lifestyle.
- Financial simplicity is also included on the list.
- A simple ETF portfolio diversified across the major asset classes can get the job done in terms of sustaining a long retirement.
What Wildland Firefighting Teaches About Investing
- Just as it is important to refresh on wildland firefighting, it is also important to refresh on investing, more specifically, your chosen investment approach.
- There will be investors who do not take the time to learn how income investing will evolve; invariably, these folks will get torched.
- You have to be willing to be contrarian and underperform for periods of time -- sometimes years.
The Media's Incomplete Coverage Of The Active/Passive Debate
Mar. 27, 2014 • 3 Comments
- The debate between active and passive portfolio management.
- Holding on to market cap weighted index funds no matter what may not be ideal for certain clients.
- There are no wrong answers, but to the extent some investors are concerned with volatility, wealth preservation and income, one solution cannot be right for everyone.
The Minefields Of Stock Market Content
- Reports say authors may have been paid to write favorable articles about micro/small cap biotechs.
- Plenty of people contribute content who clearly don’t know what they are doing.
- The writing world has gotten flatter.
The 4% Rule Is More Complicated Than You Think
Jan. 6, 2014 • 17 Comments
- Roger Nusbaum Positions For 2014: Starting To Take Defensive Action
- The Market Is Scandalous And We Have To Deal With It
- Why Doesn't The Dividend Growth ETF Grow Its Dividends?
The WSJ Says Invest Your Emergency Cash, What?!?
Dec. 5, 2013 • 134 Comments
- Cliff Asness' 10 Peeves
- Bitcoin Going Off The Rails On A Crazy Train
Habits Of The Mentally Strong
Nov. 22, 2013 • 14 Comments
Allowing For The Possibility Of Risk
Nov. 11, 2013 • 64 Comments
The Dude Who Came Up With 4% Rule Tells Barron's It Might Not Work
Nov. 10, 2013 • 48 Comments
'What The Hell Happened To The World Of Finance?'
Nov. 5, 2013 • 11 Comments