Buying gold seems like a good idea. But does it really do what you think it is going to do? This paper suggests some considerations from a historical perspective … really the only perspective because nobody knows the future, in gold or for anything else really …. and that realization in itself is a healthy perspective. “The […]
How soon people forget about the flip side of returns.* “The markets have been up for a while now.” “My accounts are up.” And many other similar statements are heard about markets and accounts. A sigh of relief (emotion). And the the insidious happens! You start comparing what has gone up the most (emotion – […]
Diversification and Asset Allocation are often confused. They mean different things. I explain the differences in the article below. Once you understand the difference, you may design a target allocation consisting of different kinds of investments that do different things at different times. Note, by kinds: they all may be in indexed mutual funds, however what makes […]
Speculators are easy to pick on since they don’t seem to do anything except make money (funny, you never hear about those who lose money … but they do). But wait, where are they now? Where did they go? Did they disappear waiting for the next round of high prices? Nope! They are still active […]
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 […]
Rebalancing is a portfolio management tool designed to get your portfolio back to your original target. Why? Because with time your allocation drifts and you take on a different risk profile with a different portfolio allocation. Let’s assume you are not investing in individual stocks (which may go to zero for a complete loss). Instead you […]
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 […]
It is not just about returns. It hardly ever was, we just thought that was all that was important (an illusion brought on by extended “good markets”). Turns out, returns are in the category of “what can’t be controlled.” Yes, an allocation can be designed to have more or less fluctuation in value. However, that […]
