9 Sep 2014

Value in the Modern World

I like old-timers. They have terrific knowledge, perspective and, above all, experience. I love hearing the war stories about how decisions were made, what succeeded and what failed and the people who were in the room. Over the weekend, I watched a rerun of WealthTrack on YouTube, a PBS show that features a reporter named Consuelo Mack interviewing many of the titans of finance. Most of them are from what… Read More

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8 Sep 2014

Markets React to Disappointing Jobs Data

The employment situation in the US was worse-than-expected in August, according to new data from the Bureau of Labor Statistics. The headline unemployment rate fell from 6.2 to 6.1 percent, but as it is often the case, the headline rate doesn’t tell the whole story.  For starters, one of the largest contributors to the decline can be explained by a lower unemployment rate among teenagers and other less-educated workers. The… Read More

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5 Sep 2014

Why We Avoid Junk Bonds

The Wall Street Journal had a headline yesterday that I couldn’t resist: Junk Bonds Deserve a Place in Investors’ Portfolio. I like to read articles where I agree with the fundamental proposition, but I REALLY like to read articles where the premise completely contradicts my view, or the view of Acropolis. This article falls in the second category since we believe that junk bonds don’t deserve a place in your… Read More

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4 Sep 2014

Supreme Court Weakens Inherited IRA

The Supreme Court unanimously ruled in June that inherited IRAs are not protected in bankruptcy. Since Individual Retirement Accounts (IRAs) were first created in 1974, they have been terrific savings vehicles. Contributions to traditional IRAs are tax-deductible and the assets grow on a tax-deferred basis until you draw the money out, as early as age 59 ½. If you haven’t started pulling money out by 70 ½, the government requires… Read More

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3 Sep 2014

Falling Dollar Fallout

Five years ago, dire predictions were a dime a dozen. It was, after all, a very scary time fraught with uncertainty. Amid all of the dreadful forecasts, one bothered me a lot less than the others: the US dollar would collapse leaving Americans pushing around wheelbarrows of worthless cash in order to buy just one loaf of bread like in Germany’s Weimar Republic. The idea was that the Federal Reserve… Read More

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2 Sep 2014

Want Value? Look Overseas at the Shiller PE

Last week, when the S&P 500 closed over the 2,000 mark for the first time, I wrote that the US large cap stocks are on the expensive side, especially if you use one of my preferred metrics, the Shiller PE ratio (a refresher on the Shiller PE ratio can be found here). Over the weekend, I received an email alert from a research firm that I respected and it ranked… Read More

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29 Aug 2014

Retire Your Mortgage or Retire With Your Mortgage?

I am frequently asked whether you should pay off your mortgage prior to retiring. The calculus is a little trickier today than it was five or ten years ago because interest rates are so low now. According to 2011 data from the Consumer Financial Protection Bureau, 81 percent of Americans age 65 and older own a home and 30 percent of those homeowners still carry a mortgage. Ten years earlier,… Read More

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28 Aug 2014

Diversification or Di-worse-ification?

As I described yesterday, the S&P 500 is on a hot streak this year, up 9.68 percent so far this year through yesterday. I should also note that outside of REITs (which I mentioned a few days ago) and Emerging Markets, the S&P 500 is the hottest thing going this year. Given that REITs and Emerging Markets are relatively small portfolio weights, you might not be feeling the benefit from… Read More

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27 Aug 2014

A New Milestone: S&P 500 Closes Above 2,000

For the 30th time this year, the S&P 500 closed at an all-time high.  Yesterday was an even bigger deal because it crossed a big round number: 2,000.  While that shouldn’t mean anything special, it does.    Investors are humans that are subject to all kinds of psychological biases and round number attachment (my name) seems to be one of them.  If you go to Wikipedia, you can get a… Read More

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26 Aug 2014

The Unique Benefits of REITs

As the S&P 500 continues to break new records, another asset class has handily outperformed the stock market so far this year: REITs. REIT is short for Real Estate Investment Trust and refers to securities (corporations or trusts in most cases) that own and operate income-producing commercial real estate. REITs are an attractive way to build a diversified portfolio of commercial real estate since the barrier to entry for a… Read More

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