It’s not always easy to grasp the value of diversification—why, in other words, it’s better to own many stocks inside a mutual fund than one or two stocks on their own. But recent research conducted by Arizona State U. finance professor Hendrik Bessembinder offers some insight.
Continue reading The Value of Diversification
We’ve all heard about as much as we can take about the U.S. Fed’s multi-part QE program, and similar stimulus programs instituted by the European Central Bank. What they mostly have in common is the purchase of government and certain mortgage-backed bonds on the world markets, which has the effect of holding down bond rates and, therefore, borrowing rates.
Continue reading False Positive?
Chances are, the market barometer you most often hear about is the Dow Jones Industrial Average. Every evening, the Dow’s ups or downs are soberly reported as if they reflect something important.
Continue reading Bad Barometer
Have you ever wondered what stock market professionals and equity analysts talk about in their spare time? Recently, the Bloomberg website featured a debate about something that is getting a lot of attention recently: the historically high, and still-rising U.S. stock market valuations. People have been willing to pay more, and more, and more for a dollar of corporate earnings. What does that mean about future returns?
Continue reading Measuring the Market
A recent Wall Street Journal article, citing a study by the Center for Research in Security Prices, tells us something remarkable about the times we are investing in: the number of stocks on the U.S. market has quietly diminished by more than half over the last 20 years. In November 1997, investors could choose from 7,355 U.S. stocks. Today, there are fewer than 3,600.
Continue reading Vanishing Equities
The U.S. Federal Reserve Board’s Open Market Committee just raised the Fed Funds rate from 0.75% to 1.00%—the second rate hike in three months. So what should you do with your investment portfolio in light of this change?
Continue reading Interest Rate Hike
Over the last few weeks, professional financial planners have been fielding calls from clients who are asking the kinds of questions that every professional investor hates to hear. The Dow has reached (and then fallen back below) 20,000. Should I take money off the table?
My preferred candidate didn’t win the election, and I think the world is going to hell in a handbasket. Don’t you think I should sell my stocks now before it’s too late?
Continue reading How to Reset Your Portfolio (Regardless of What You Think of the Markets)