Almost a year ago to the day, I wrote an article that discussed a well-known quote from a famous investor, Sir John Templeton. He said that ‘Bull markets are born on pessimism, grown on skepticism, mature on optimism and die in euphoria.’ Clearly, the bull market that we’ve enjoyed for the last nine years was born in the pessimism of the 2008 global financial crisis. The rally grew on optimism and… Read More
One of the key elements of the new tax law is that it nearly doubles the standard deduction from $12,700 to $24,000 for joint filers (for simplicity, I’m not addressing individuals or heads of households, although the same concepts apply). Historically, about 70 percent of people used the standard deduction and that number is expected to jump to 90 percent under the new law. For the 20 percent that will… Read More
We are pleased to provide a digital copy of Portfolio Insights, our quarterly newsletter. Table of Contents: Stock Market Summary Bond Market Review The New Tax Laws and You What is Bitcoin, Anyway? The Big Picture & Fast Facts Click here to read the issue: 2017 Q4 Portfolio Insights
Last Thursday night, I attended a Financial Planning Association (FPA) meeting here in Chesterfield presented by William Emmons, an economist from the Federal Reserve Bank of St. Louis. His presentation, titled Recession Risk in 2018 is Greater Than You Think, was fascinating. Despite what people say about government workers and folks from the Federal Reserve, I thought Mr. Emmons was smart, fair and thoughtful – important traits for an economist. Mr. Emmons… Read More
One thing that you can count on at the start of every new year is a fresh set of predictions from those of us in the investment business. Last year, one of the most widely discussed and accepted views for 2017 was that the dollar would continue to gain strength, as it had for the previous three years. Instead, our currency lost about 10 percent, widely defying the consensus views…. Read More
Late Friday evening, Congressional Republicans released the final version of their tax reduction and simplification plan. Although many elements match the House and Senate versions, there are some differences worth noting. I should point out, though, that the following is a broad summary – I haven’t read all 1,100 pages of the proposed law. Furthermore, this summary only covers the changes for individual filers, not corporations or partnerships. Lastly, you… Read More
For almost 50 years, one of the most controversial ideas in finance is that markets are efficient, as presented by Gene Fama’s Efficient Market Hypothesis (EMH) in 1966. Let’s start with a simple definition of EMH: Current market prices incorporate all available information and expectations and are the best approximation of intrinsic value. In some ways, it’s such a simple statement that it’s a little surprising that it’s so controversial…. Read More
Long time readers know that I’ve been cautious on US stocks for some time, calling them overvalued in 2014. Last year, I referred to a quote from Sir John Templeton, who famously said that ‘Bull markets are born on pessimism, grow on skepticism, mature on optimism and die in euphoria.’ I said then that I could see the rally continuing on for years but that we were probably moving from… Read More
In my mind, the word ‘bucket’ should be banned from the investment industry because it brings to mind the ‘bucket shops’ where unlicensed hacks in boiler rooms cajole unwitting investors into pump and dump schemes. Despite my view about this word in this industry, it seems to be what we as a group have settled on for a particular retirement planning strategy (I’m not a fan of smart beta either,… Read More
The recent poor performance of junk bonds received a lot of attention last week, culminating in an article in the Wall Street Journal that asked, ‘Are High Yield Bonds the Canary in the Coal Mine?’ The two largest junk bond ETFs, HYG and JNK, saw their largest weekly pullbacks since August, falling just short of a percent each on unusually large volume. There are several reasons for the selloff: Barron’s… Read More
