Category - Investing

1
Lessons Learned in 2008
2
Are We Entering a Recession, You Need to Act Now!
3
If It Makes You Feel Any Better, Harvard’s Portfolio Lost Big, Too
4
The Power of Compounding
5
Diversified Portfolio is Still the Long-Term Favorite

Lessons Learned in 2008

photo by: misterteacher

photo by: misterteacher

Finally, it’s over! The worst year of stock market performance since the Great Depression ended last Thursday with the S&P 500 down 37%. In 2008, there was no place to hide in the financial markets, right? Wrong. An analysis of the following chart presents yet another argument for the value of diversification in an investment portfolio:


The return on government bonds is not a misprint: 22.59%. An investor with a well-diversified portfolio and an appropriate asset allocation mix of stocks and bonds felt a vastly reduced sting from market declines as compared to a pure stock investor
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Are We Entering a Recession, You Need to Act Now!

009 - Recession Act Now CartoonWe’re facing unprecedented times in our economy. The government is in the midst of a $700 billion bailout. The stock market has plummeted and we are in the middle of a housing market meltdown. Unemployment is increasing as well as gas prices (depending on the day). Now that the elections are over the media says we are entering a recession. If you’ve been following the news you already know we’re facing difficult economic conditions and it may seem as if the end is near.

Daily I’m asked about the economy and at least weekly I receive a media inquiry asking …

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If It Makes You Feel Any Better, Harvard’s Portfolio Lost Big, Too

A comment that I’ve heard several times in the last few weeks is, “I took a look at my 401(k)/mutual fund statement and it was really depressing.” Well, take heart: at least you’re not down by eight billion dollars….

Various sources are reporting today that Harvard University’s endowment has experienced investment losses estimated at 22% since June 30, the end of the school’s fiscal year.  Since the portfolio was at almost $37 billion then, that translates to a loss of about $8 billion.  The Associated Press and other sources are reporting that Harvard President Drew Gilpin Faust has broken the

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The Power of Compounding

Image by: KRHamm

Image by: KRHamm

Remember all the time we spent as children dreaming about what it would be like to be a millionaire? Surprisingly, if we had spent that same amount of time running a candy store or a lemonade stand, we would all be on track. Why didn’t anyone tell us it was so easy! Of course, many adults don’t comprehend the power of compound interest, so I suppose we should give ourselves a bit of a break, but here is the secret: assuming historical investment rates of return hold steady, a 10-year old would need to invest only $25.52 …

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Diversified Portfolio is Still the Long-Term Favorite

There’s a lot of soul-searching among advisers these days, when financial markets all over the world seem to be tanking simultaneously. Still, past experience has shown that pulling an investment portfolio entirely out of stocks after a downturn is a bad idea. The problem is that no one can say for certain when stock markets will begin to go up.  Mind you, eventually some stock timer somewhere will announce that it’s time to get back into stocks, and lo, the stock market will climb, as if by magic.  But with thousands of professional stock timers out there making predictions, someone

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