When you buy an index fund, it’s natural to expect that your fund will earn basically the same return as the index. In a perfect world, you should expect an index fund to earn the index returns minus the cost of the index fund. If an index fund charges 0.1 percent annually and an index earns 10 percent, you should expect to earn 9.9 percent. There are other reasons why… Read More
One of the bedrock ideas behind Modern Portfolio Theory (MPT) is that diversification lowers risk. A simple view of that concept is that a portfolio of many stocks is less risky than a portfolio that contains one stock because the impact of a failure like Lehman Brothers or Enron won’t blow apart your whole portfolio. Of course, all stocks can go down substantially, like they did in 2008, so diversification… Read More
We are pleased to provide a digital copy of Portfolio Insights, our quarterly newsletter. Table of Contents: Protect Yourself From Fraud Inside the Economy Stock Market Summary Maximizing Social Security Is Janet Yellen Bluffing? Click here to read this issue: 2015 Q2 Portfolio Insights
While Greece is getting all of the headlines, the bubble in mainland Chinese stocks that I wrote about in April and June is now bursting (click here or here for refreshers). The Shenzhen index is down -38.5 percent from its peak on June 12th through yesterday and the Shanghai index is down -27.9 percent over the same time period. The following shows these two indexes in yellow and orange compared to the S&P 500 in blue… Read More
While I’m dying to take a break from the ongoing financial crisis in Greece, I also want to show how the calamity isn’t destabilizing markets so far. Importantly, US stocks barely budged yesterday in response to the news, although stocks overseas didn’t fare as well. The FTSE Developed Markets ex North America index fell by -1.61 percent while the FTSE Emerging Markets Index dropped -1.98 percent. While prices tell us… Read More
The end of the second quarter is always a relief for me because for the past six years, it has meant that we are finally through getting our CEFEX certification. As you probably already know, we serve our clients in a fiduciary capacity, which means that we are required to act in the best interest of our clients. You may think that everyone in the financial services industry has to… Read More
