The
"Markives"
Remember
all of those New Year’s Resolutions you made to yourself
last year? You know the ones. This next year was going to be different
and you were going to get the year started off on the right foot.
Some of these resolutions you knew were going to be pretty tough
to do, but you thought maybe this was the year that you could
do it.
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more)
Halloween
is the official day of trick or treat, but I find plenty of both
to suit me in the stock markets on a daily basis. In the last
few years it seems to me there have been more tricks than treats.
Many of the tricks experienced in the stock market were self-inflicted
by public investors who were looking for the big payoff, when
they should have been more cautious.
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more)
If
you have kids, chances are that you will suffer “College
Sticker Shock” at some time in the future. The shock comes
when you write those checks for tuition, room and board, books,
lab fees and the assorted other expenses associated with the cost
of sending your offspring to a college or university. The cost
of education at a college or university goes up significantly
every year. If you are thinking about paying for all or only a
portion of your child’s college education, you had better
be taking action today.
(read
more)
Every
August for the last 5 years I have been experiencing College Sticker
Shock. Even though I am prepared for it and have been thinking
about it for oh….10 months, this time of the year always
hits me hard. August is the month when tuition payments
for college start coming due, and I have to write a couple of
big checks.
College
costs are rising at an outlandish rate. The national average is
around 7%. That means the cost of college is doubling about every
10 years. If you have young children and are thinking about college
for them, you better be putting money aside, starting yesterday.
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more)
Recently
I was reading a fascinating book on investor psychology by Hersch
Shefrin that related a valuable lesson on investing. He illustrated
the lesson by telling a story, one that we can all relate to.
Over
25 years ago a young professional couple was looking for ways
to invest that would reward them with above average rates of return.
James, a good friend of theirs who owed the couple a favor came
to Bill and his wife with an opportunity to invest in real estate.
James described the investment as a “sure thing.” True
to his word he reported back a year later that the property had
indeed done very well. They had more than doubled their money.
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more)
People
are getting excited about the stock market again. They are opening
their monthly statements, checking out their 401k balances at
work and beginning to feel they may have a financial future after
all. Since the middle of March the markets have been going up,
and in a pretty impressive fashion. They have paused along the
way a couple of times, but not for very long. Already this year
the Nasdaq and the Dow Jones Industrial Average have posted returns
that we thought were gone for good.
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more)
On
the whole most portfolio managers are pretty dull people. They
are highly analytical and tend to enjoy the company of company
financial statements and cash flow projections rather than every-day,
run of the mill people like us. To be really good at what they
do they have to be like that. It’s a requirement of the position,
one of the very first things listed on the job description. When
they are not studying financial statements they are talking to
company executives. They spend hours on the phone talking to them
trying to pry out a tidbit of information that may give them an
edge when deciding whether to purchase that company’s stock
or not.
(read
more)
In
1999 everybody was much happier than they are today. At least
those who were looking at their investment portfolios were happier
back then. And there was a lot to be happy about. If you were
investing in technology companies you were very happy. You were
probably so happy that you had moved all of your money in your
401(k) accounts into fast growth stocks. And then you became happier.
(read
more)
These
days hardly anyone wants to talk about investments. Whether it
is your 401k plan, your IRA or your stock portfolio, it is simply
too painful to discuss. Perhaps you have taken to ignoring your
account statements when they come in the mail every month. You
know it is going to be more bad news, so why ruin a perfectly
good day.
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more)
Undoubtedly
you have heard about lemmings. They are those furry little rodents
who live in the upper reaches of the arctic and have been known
to swarm in large numbers and suddenly rush off of cliffs and
fall to their death. The truth is that they don't commit mass
suicide by running off cliffs in large numbers. They do migrate
in large numbers from one feeding area to another and they seem
to do so in a very chaotic manner. No one is really sure what
triggers this behavior but it does seem to occur every 3-5 years.
The
same could be said of sheep, caribou, buffalo and so on. At some
point their animal instincts simply take over and they take off
in a crazy, frenzied rush to get somewhere fast.
Stock
market investors have similar tendencies, even though we consider
ourselves to be higher on the food chain than lemmings or sheep.
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more)
As
I was driving north on I205 last weekend my oldest son pointed
out the billboard on the side of the freeway that announces the
updated prize money for the Powerball drawing. It had grown to
an unbelievable $280 million! For a while we played the game that
all of us do when we think about hitting it big. We talked about
what we would buy and whom we would give money to.
My
son talked about the car he would buy and the big screen TV with
the surround sound speakers. Being more worldly and responsible
I of course thought about the bills that I would pay off, the
mortgage, business loans and the college tuition bills that seem
to arrive at the most inopportune times.
For
a while I continued to ponder the possibilities of a fortune like
that. Would I, like so many others who say they will keep their
jobs, stay in the same house, etc, stay the same person or would
I suddenly change my lifestyle and become a world traveler or
endow some huge charitable organization?
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more)
Those
of us in the financial services industry have done you no favors
when it comes to helping you set financial goals. We go to great
lengths in imploring you to establish financial goals and stick
to them. After all, how can you get somewhere if you don’t
know where you are going. We all know the power of goals. Goals
focus our energies towards the successful attainment of that which
we seek. What we seek should be important to us and it should
bring feelings of joy and fulfillment when we get there. When
it comes to setting goals we financial service professionals tell
you to set goals, but we never show you how to set meaningful
goals.
(read
more)
People
love to take pot shots at the economy of the United States. There
is always someone either overseas or domestically who believes
our economy is on the brink of disaster, because of problems with
the balance of payments, ballooning national debt or whatever
the topic of the day, week or month happens to be. The amazing
thing about our economy is that it has endured some pretty tough
times in its relatively short history. It has survived several
wars, multiple recessions, depressions, inflation, deflation and
even stagflation. Currently we are emerging from a difficult period
of economic slowdown. There is some talk going around that the
economy is slipping back into a recessionary mode, but no compelling
arguments are evident and most likely those concerns will soon
fade.
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more)
Fifty
years ago a young PhD candidate at the University of Chicago successfully
defended his doctoral thesis on a idea that would eventually change
the way investors built their stock portfolios. Harry Markowitz,
at the age of 26 developed what we know today as Modern Portfolio
theory and the significance of his work would earn him a share
of the 1990 Nobel Prize in Economics. So revolutionary was his
thinking that a member of the doctoral examining committee, Milton
Friedman, a famous economist almost held back Harry’s degree
because the substance of his work did not neatly fit into the
field of economics, mathematics or finance. However, the significance
of his work was clear to his doctoral committee and they knew
his theories would create a windstorm of controversy and debate
in the tight circles of professional money managers.
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more)
The
current market environment has caused many investors to ask themselves
serious questions about their portfolios. The last several years
have been rough on investors’ emotions. First we witnessed
the “irrational exuberance" of the 1998-99 market, where
virtually every stock investment grew. Tech stocks seemed to be
riding rocket ships to the moon as prices and valuations reached
unprecedented levels. Investors jumped on the bandwagon and continued
to feed the frenzy. The last two years brought the rockets crashing
back to earth, along with many investors’ retirement, college
savings and vacation plans. (read
more)
