Tag Archives | return

Dow Jones

Whew! We are back near market peaks! Yippee? Or, oh-no?

The market (Dow) closed today (Friday the 25th of January) at  13,895.98 near the market peak of 14,164.53 on October 9th 2007. This means the Dow is now within 268.55 points of that record high (or under 2% within the record … certainly within reach of going over the record). Emotionally, this appears to be cause for […]

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interest rate

Should you focus on just dividends?

Dividends appear to be easy to focus on because their returns are expressed in yield, which we translate to an interest rate in our brains. People compare this “interest rate” to returns from stocks, or to CDs, savings accounts, etc., in order to make a selection as to which one they prefer … of course they gravitate towards the higher […]

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disappearing

Disappearing Returns

Equity risk premium … what economists call expected stock returns. The first part of the video is the academic perspective of expected equity returns. Of interest, and the purpose of my blog, is the later half of the short video (2:39) … “Why should anyone care?” Why does this matter? Because … Pensions are likely […]

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govt debt

Sovereign Debt

Sovereign debt is debt issued by countries, not companies (which is commercial debt sometimes called private). Currently, most people list Portugal, Italy, Greece and Spain (PIGS) as countries with problems. The graphic from The Economist “Indulging the NULJ” shows that the US is among countries that will be in this boat on the current budget […]

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speculator

The role of speculators in markets

Whenever prices rise (or fall) a lot, it is popular to find a “faceless crowd” to place that blame onto … “it must be somebody’s fault … and it’s ‘them’ … ” In economics it is probably better explained through the “invisible hand” of supply and demand. Milton Friedman’s explanation of how speculators affect markets […]

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Returns vs Contributions Comparisons

Are market returns really the key to your portfolio value?

Short answer … No. The key during the early years are your contributions. (See the Dark Blue line). You need to plant the seeds that can then grow later. I show below how it took 13 years for returns to overcome the power of contributions. And of course, you control contributions while your control over […]

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