Even the most experienced investors have felt unnerved by the recent market sell-off. To help calm nerves and foster a long term perspective, here are our answers to some recently asked questions. Is the recent market decline the start of another major bear market? Many of the world’s stock markets are already in bear market […]
Anne Doremus
What Investors Should Do Now
Investors are not very good at handling market downturns. Research has shown that we feel the pain associated with investment losses more acutely than the pleasure of gains. Our ability to stick to a carefully considered investment plan deteriorates as losses mount and perhaps most dangerously, our reactions lag economic reality (see graph below). Consider […]
Coffee and Chocolate – What’s Not to Like?
In the investing world, popular opinion is not always your friend. Investors’ tend to “follow the herd” and this often leads to overpriced securities and ultimately, poor investment returns. But with recipes, things are a little different. The best are handed down from generation to generation. In the kitchen, follow the herd. Our recipe this […]
Social Security’s Past, Present and Future
When designed back in 1935, Social Security was largely a pay-as-you go system focused on providing financial security to the elderly. Over the years, programs were added to include benefits for the disabled, widows and children. Today, over 59 million people receive almost $870 billion in benefits from one of several Social Security Administration programs. […]
The Buyback vs. Dividend Debate
There seems no shortage of things to worry about these days. Is China’s economy decelerating? What will an increase in interest rates do to the stock market? And let’s not forget the ongoing political upheaval in the Middle East. But in the midst of this angst, it is important to remember that Corporate America is […]
This Picture Really is Worth 1,000 Words…
The chart below is really big… and also a bit complicated. But bear with me, it’s worth going through. Sometimes a picture is worth a thousand words. The black bars in this chart from JP Morgan show the price return of the S&P 500 for every year since 1980. The red dots show the largest […]
“Just because you’re paranoid doesn’t mean they aren’t after you.” – Joseph Heller, Catch-22…
Recent data breaches at institutions ranging from retailer Target to health insurer Anthem illustrate that cybersecurity is a growing problem today. The financial services industry is not immune to these risks. Consider that a recent SEC sweep on cyber attacks found that 88% of broker dealers and 74% of advisors said they have experienced cyber […]
Holding Hedge Funds’ Feet to the Fire
As investment products go, hedge funds have to be considered a big success. Today over 10,000 funds manage an estimated $2.8 trillion in assets, a level that has tripled since 2004 alone. Ironically, this growth has taken place in the face of rather lack-luster performance results. For the sixth consecutive year, hedge funds failed to […]
The Stock Price Valuation Debate
Fed Chair Janet Yellen’s early May pronouncement that “…equity market valuations at this point are generally quite high” caused quite a stir with investors concerned that another market “correction” was just around the corner. Many who believe that stocks are overvalued today point to recent readings of the Cyclically-Adjusted Price to Earnings (CAPE) ratio. This […]
Investment Success
“Investing is not a game where the guy with the 160 IQ beats the guy with the 130 IQ… what you need is the temperament to control the urges that get other people into trouble in investing.” Warren Buffett Professional money managers need to become proficient in a wide range of subjects including statistics, accounting […]
Strange Developments Across the Pond
What if someone told you that your savings, instead of making money, actually cost you money? As strange as it may sound, this is what is going on in many European countries today. Instead of paying money on deposits, many central banks are charging fees to hold their big bank customers’ excess deposits. Several high […]
The Case for Commodities
Back in early 2011, the investment thinking around commodities centered on two big ideas. First, commodities would protect portfolios from the inflation that would eventually result from the U.S. government’s seemingly endless easy money policies. The second theory supported by well-respected strategist Jeremy Grantham held that limited supply and insatiable global demand combined would cause […]
