On Monday I started seeing the ominous headlines on financial television and websites. The S&P 500 had just made a “Death Cross”, defined as when the 50 day moving average of stock prices crosses below the 200 day moving average. While the term sounds serious, is this something investors should be worried about?[Read more…] about Should you be worried about the “Death Cross”?
How Common are Large One Day Market Moves?
I can see the lead on CNBC tomorrow morning already
Market Plummets 3%; Worst daily move since…(Cues dramatic music)
a week ago Monday. (Yanks needle off record)
Yes, for all the breathless talk on CNBC and Fox Business today, the last time we saw the market drop this much in one day was August 5th. Less than 2 weeks ago. You remember don’t you? Yeah, neither do I.
I was prepared to spend some time this afternoon going back through the year to find the last 3% drop in the market. 29 seconds later, voila.
In fact, August 5th was basically a twin of today. The market (S&P 500) fell practically the same amount and finished at essentially the same level, 2,844 v. 2,840, where it stands today[Read more…] about How Common are Large One Day Market Moves?
The Day Godzilla Came to Wall Street
Today, October 19, 2017 marks the 30th anniversary of ‘Black Monday’. On that fateful day in 1987 the Dow Jones Industrial Average, aka the Dow, had its worst single day drop in history. By the time the closing bell mercifully sounded at 4 p.m. the market had lost 508 points or 22.6% of its value. In our world today with the Dow at 23,000, that’s equivalent to a 5,100 point drop. [Read more…] about The Day Godzilla Came to Wall Street
Sequence of Returns – A Key Aspect of Investment Performance
When reviewing investment alternatives, average annualized returns are important, but they don’t tell the whole story. The sequence of returns matter as well. And as we’ll see, while they can have an impact when accumulating savings, their effects can be more dramatic for portfolios in distribution, such as during retirement. [Read more…] about Sequence of Returns – A Key Aspect of Investment Performance
3 Investment Strategies That Beat the Market (Pt 2)
Academic research has found 3 strategies, or factors, that have historically outperformed the S&P 500. The first is that smaller companies (aka small caps) tend to outperform larger companies. The next factor that excels over long periods is value. The third factor, price momentum, will be covered in a future post.
Value Investing – If it’s Good Enough for Warren…
Value investing is one oldest methods for investing in stocks. Benjamin Graham, known as the father of value investing, wrote one of the first academic textbooks on value investing with his seminal “Security Analysis”, first published in 1934. He followed that up with “The Intelligent Investor”, a classic bestseller which Warren Buffett has called, “By far the best book on investing ever written.” [Read more…] about 3 Investment Strategies That Beat the Market (Pt 2)
3 Investment Strategies That Beat the Market (Over the Long Term)
Beating “the market” is not easy. Every year there are any number of studies published which tell us only (pick a number between 10% & 55%) of active managers beat the market in a given year. (Source: Morningstar, The Economist)
If you have the discipline and patience, however, there are three strategies which have been proven to outperform the market over longer periods of time. [Read more…] about 3 Investment Strategies That Beat the Market (Over the Long Term)
The Forecasting Game
We love predictions. We know they’re usually wrong, but we want them all the same. The media knows this and provides us with an almost unlimited supply, especially when it comes to the holy trinity of weather, sports, and the stock market. We will impatiently wait through the commercials for the 7 day forecast or to see ESPN trot out the next expert telling us which NFL teams are going to be in the Superbowl. And for the last few weeks, the financial media has given us all manner of experts making predictions about what the markets and economy are going to do in 2016. Of course, with last week’s market activity, some of them may be making revisions to their forecasts. [Read more…] about The Forecasting Game
My Grandparents, Investment Gurus
(An article based on this post was featured in the Nov/Dec 2015 issue of New River Valley Magazine.)
Everything I needed to know about managing investment portfolios, I learned from my grandparents. As I don’t think either of them ever bought a stock, bond or mutual fund it took me several years to come to this realization.
You see, Sam and Annie were farmers. [Read more…] about My Grandparents, Investment Gurus