>Dow ‘Catching Up’ Closes Above 11,000

>Chron.com Dow ‘Catching Up’ As It Closes Above 11,000

Another “Why is this news” headline…..From the headline and the story you’d think people hadn’t made any money since June of 2001, you’d be wrong of course. A diversified portfolio of stocks has done great since June of 2001 as has a portfolio of stocks and bonds. Had you invested in June 2001 (the last time the Dow was at 11,000) in a diversified portfolio of stocks you would have a total return in the 75% range (a 13% annualized return). A portfolio that was 60% stock, 40% fixed income (all diversified) would have returned a total of 52% (a 9.5% annualized return). Heck, even if you invested solely in the S & P 500 you’d be up an annualized 1.45%.

The news isn’t that diversified investors did fine during what has been deemed a “bear” market, it has been that the markets haven’t moved in four years and nobody has made money – this just isn’t true.

Remember, the financial news media is not here to give you news and perspective, they are hear to sell advertising. Nothing wrong with that, but just remember that sensationalism sells better than facts. The facts remain that throughout time diversified portfolio’s have continued to hold up.

Scott Dauenhauer, CFP, MSFP


>Want To Earn More on Your Savings?

>I speak with a lot of people everyday and one thing I hear consistently is “why can’t I earn more than 2% on my savings account at my bank.” My answer is that you can, as long as your comfortable with the web. The above link is a list of online banks (many of them offshoots of banks that have been around for many years – all FDIC insured) that offer interest rates of about 4% with no minimums and no fees, check them out.

One that I use for my clients on occasion is www.emigrant-direct.com, currently paying 4%.

Scott Dauenhauer, CFP, MSFP


>History Repeats Itself

>Smartmoney.com: Ahead of the Curve: History Repeats Itself

The fearmongers are out in full force touting the inverted yield curve as the next sign of gloom and doom. Luskin, in the above article does a good job explaining the yield curve and why it doesn’t indicate the world is coming to an end. It’s well written and quite understandable.

Scott Dauenhauer, CFP, MSFP


>Bill Miller beats S&P for 15th Year

>Well, Bill Miller of Legg Mason Value Trust has done it again, beat the S & P 500 that is. He has now beaten the S & P 500 15 years in a row. But why is this news? I was under the impression that the vast majority of mutual fund managers consistently beat their benchmark index, if this is so than why is it a big deal that a mutual fund manager did what he is SUPPOSED to do?

The mere fact that the press and investment community celebrates the fact that ONE mutual fund manager has consistently beat his benchmark is another point of proof that active money management is a loser’s game.

What is more interesting is the fact that more money managers should be beating their benchmark than actually are. Even in an efficient market there will be those managers who are lucky and will beat their benchmark by no skill of their own, statistically speaking their should be more than just one. It is quite telling that beating the S & P 500 for 15 years is news. What would really be news is if the majority of managers beat their benchmarks consistently for 15 years…..but of course that could never happen.

Scott Dauenhauer, CFP, MSFP

P.S. Though Bill Miller beat the S & P 500 he did not beat a diversified portfolio of stocks.


>Pundit Watch

>Smartmoney.com: Pundit Watch: Archives

I thought this would be interesting. Smartmoney invites the so called “experts” to make their one year predictions – which of course is just worthless. But if you’re interested in ready worthless dribble from some people who think they are soothsayers….be my guest!

To see how last years fared….click here!

1 year predictions are worthless – always remember that the future cannot be predicted.

Here are a few websites with predictions for 2005!

Using Astrology for predicting stocks…..not exactly a fiduciary method!

FoxNews Hounds Predictions:

Have fun and Happy New Year!!!

Scott Dauenhauer, CFP, MSFP


>Interest Rates & Bonds


It has been a wild ride for interest rates and bonds over the past two years. Interest rates on the shortest term treasury bills have risen by over 400% since January 2004 from a low of .74% to 4.01% on December 5th, 2005. This has been due to the Federal Reserve raising short term interest rates 13 times since June of 2004.

Attached is an article I wrote that I couldn’t post to this blog because of formatting issues. I encourage you to read it along with the Vanguard document (click on above link).

Scott Dauenhauer, CFP, MSFP


An Independent Fiduciary

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