News & Insights

Prediction Season

by Jim Freeman, CFP® on 12/16/2016

stockpredictionIn one of our newsletters from October, we included an article entitled, “Presidential Elections and the Stock Market”. The conclusion of the article was:

Trying to make investment decisions based upon the outcome of presidential elections is unlikely to result in reliable excess returns for investors. At best, any positive outcome based on such a strategy will likely be the result of random luck. At worst, it can lead to costly mistakes. Accordingly, there is a strong case for investors to rely on patience and portfolio structure, rather than trying to outguess the market, in order to pursue investment returns.

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posted in BlogInvestments

Interesting Article: Hold Your Nose and Buy Europe

by Jim Freeman, CFP® on 6/17/2016

Jason Zweig wrote an interesting article in the May 28th Wall Street Journal entitled, “Hold Your Nose and Buy Europe.”  Zweig says that as investors search for bargains in a world of overpriced assets, they should be guided by the EMH. That isn’t the Efficient Market Hypothesis, which holds that the price of a security reflects all available information but instead Zweig’s own Emetic* Market Hypothesis, which says if the mere thought of owning an asset turns your stomach, that probably is a sign to buy it.

*Emetic – a medicine or other substance that causes vomiting.

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Beware the Rollover Offer: 5 Important Questions to Ask

by Chris Jaccard, CFP®, CFA on 5/28/2016

Last week, one of my aunts asked me about rolling over an old 401(k) plan.  She had been getting calls from a friend saying she can get up to $8,000 in bonuses/incentives if she does the rollover now.  Wow, I thought, this is way beyond the usual $100 or $200 cash offers I’ve seen.

New Law Not in Full Effect

My remark to her was – Beware!  I told her of the new law I wrote about last month, and that we recently learned that the protections actually don’t come into full effect until April 2017.

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posted in BlogInvestmentsPersonal Finance

New Department of Labor Rules Coming Soon

by Chris Jaccard, CFP®, CFA on 4/4/2016

The Department of Labor is coming out with new rules in the next couple of weeks that some in the financial services industry have said is the most disruptive piece of regulation to come down since 1974.  What will it say?

It will basically require that financial advisors act in their clients’ best interests – as a “fiduciary” – when advising on company retirement plans such as 401(k) plans.  Currently, advice on these plans only has to be “suitable”, which can lead to the sale of expensive or inferior investment products.

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posted in BlogInvestmentsPersonal Finance

S&P 500 Annual Returns and Intra-Year Declines

by Jim Freeman, CFP® on 11/2/2015

Last quarter the US stock market as measured by the S&P 500 experienced its first 10% correction since 2011. As you can see from this graph, “Annual Returns and Intra-Year Declines” these types of fluctuations are normal and to be expected. The red dot and red negative numbers on the graph show the largest peak to trough drop during each year and the black bars and black numbers show the total returns for each year. The total returns shown here do not include dividends.

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Five Investments to Consider at 50

by Chris Jaccard, CFP®, CFA on 8/11/2015

Age 50 is great time to a take a look at your retirement trajectory, and re-evaluate your financial circumstances:

1. Invest in Your Career

At 50, you have probably gotten close to your lifetime peak earnings level – it’s a good time to objectively evaluate your position, and decide how to approach the next decade or two of working years.  Have you been itching for a career change?  Are you being paid what you’re worth?  If you are eligible for a traditional pension plan, look into how your benefit is calculated – to best take advantage given your circumstances and goals.

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posted in BlogInvestmentsPersonal Finance

Returns for Globally Diversified Portfolios in 2014

by Jim Freeman, CFP® on 1/16/2015

Returns for globally diversified portfolios were low in 2014. We periodically refer to GMO (a Boston based investment manager) for their asset allocation insights and their 7-year return forecasts. GMO also manages two globally diversified asset allocation funds. Although GMO has a solid performance track record, in 2014 their Benchmark Free Allocation Funds (GBMFX) had a return of 1.21% and their Global Asset Allocation Fund (GBMBX) had a return of 1.31%.

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The ABCs of Mutual Fund Share Classes

by Chris Jaccard, CFP®, CFA on 11/19/2014

You don’t need to read a prospectus to benefit from knowing the basics about mutual fund share classes. It will help you uncover your actual investing costs (especially when dealing with a broker), avoid unnecessary fees, and boost long-term performance. As you will see, even after you select a fund, it is crucial that you choose the most appropriate share class of that fund.

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Are We Due For a Market Correction?

by Jim Freeman, CFP® on 6/27/2014

In a recent Wall Street Journal article Jason Zweig wrote, “As of this Friday (6/13/14) the S&P 500 has gone 980 days without a 10% decline the fifth-longest such stretch on record.”

His statement implies that a 10% correction may be right around the corner. I have no argument with that. But I would also add that a 10% correction is always right around the corner. In fact from 1900 to 2010 according to the Capital Research and Management Company 10% corrections have occurred on average once per year. And we all know how fast a year goes by.

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Is it better to invest all at once in a lump sum, or little by little over time (by dollar cost averaging)?

by Chris Jaccard, CFP®, CFA on 4/29/2014

The Prevailing Research

The decision to invest all at once or little by little is one that researchers have addressed many times over the years. The results from a somewhat recent Vanguard research paper pretty much line up with others I have seen: Statistically, an investor is better off investing all at once.

About two-thirds of the time, the immediate Lump Sum Investor (LSI) beat the Dollar Cost Averaging Investor (DCA) who made installment investments over 12 months.

Outperformance Lump Sum vs Dollar Cost Averaging

Details Matter

Despite these results, the background and other factors need to be considered when choosing how quickly to invest a cash sum.

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Disclaimer

Posts are general in nature and do not constitute the rendering of legal, investment, accounting or other professional advice.