Investment Wisdom
Are you “Smart Money” or “Dumb Money”?
Amateur investors often look down on professional fund managers thinking they are not worth their fees. Meanwhile, professional fund managers tend to think of amateur investors as “dumb money”. What is “dumb money”? It is investors that invest when the markets are high and then sell when the markets are low.
Read MoreTiming the Market vs. Buy and Hold
After the recent strong stock market gains, I have been asked a few times lately: “What should we do to protect against a possible market downturn? Should we become defensive?” If you could move in and out of the market at the right time, you would obviously increase your returns and avoid some losses. On…
Read MoreLosing Money by Chasing Yield
The classic truism by Raymond DeVoe Jr. is particularly appropriate today: “More money has been lost reaching for yield than at the point of a gun.” Searching for investments with higher yields has often led to bubbles and has often lost money for investors. For example: The sub-prime mortgage-backed securities that collapsed in 2008 were…
Read MoreDumbest Investment Line of 2012 – “In these uncertain times”
One of my pet peeves is the phrase “in these uncertain times”. I see it constantly in the media and in financial industry talks and articles. Rarely is anything smart said after “in these uncertain times”. When are times not uncertain? Was 2012 uniquely full of uncertain news? No. Pick any year. If you google…
Read MoreConverting Income to the Right Type with Corporate Class Funds
Investing for income can mean that you have to chose between the most appropriate investment and the most tax-efficient one. You can convert investment income into the right type using corporate class funds. The most highly taxed income is interest. There is a significant benefit for you if you can convert interest income into dividends…
Read MoreTax-Efficient Income
Once you retire, it is important to understand how all your income will be taxed. Your investment choices will affect the type of income your receive. You can save a lot of tax by knowing which type of income is taxed the least by your income level. This article was written for The TaxLetter, a…
Read MoreDeath of Equities – Again?
“The cult of equity is dead.” – Bill Gross, CIO of PIMCO & manager of the world’s largest bond fund Perhaps the most famous spectacularly incorrect forecast was the August 13, 1979 BusinessWeek article titled “The Death of Equities”. It signaled the start of one of the greatest bull markets in history with the…
Read MoreIt’s Not the Bear You See
bear markets
Read MoreTop 5 Asset Allocation Strategies
“Wide diversification is only required when investors do not understand what they are doing.” – Warren Buffett Probably the single most common incorrect quote in investing is: “Asset allocation determines 94% of your investment returns.” The quote refers to a study1 that is misquoted by both the investment industry to market simple investment strategies and by…
Read MoreLifecycle Investing – The Benefits of Diversifying Across Time
“The point is simple: if diversification across asset classes is so good, why not also seek greater diversification across time periods?” – Ian Ayres Last Decade Risk There is a big risk in the way most people save for retirement. The big risk is that the vast majority of the investments most people own during…
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