16
Sep
2014
The Naked Truth About Actively Managed Mutual Funds
Twice per year, Standard & Poor’s issues a report that compares the performance of actively managed mutual funds to corresponding S&P indexes. The most recent report, the S&P Indexes Versus Active, or SPIVA, can be found here. It’s a great report because it provided high quality, continuous evidence in the ongoing debate about active versus passive management. The debate, which has being going on for 30+ years, centers on who… Read More
15
Sep
2014
Where Your Taxes Go
If you pay quarterly taxes, they’re due today! The next payment isn’t until January 15th of next year, but it probably makes sense to start salting away money now so that you’ll have plenty on hand in a few months. If you aren’t sure whether or not you need to pay quarterly taxes, you probably don’t. The quarterly taxes are actually estimated tax payments on income that is not subject… Read More
12
Sep
2014
Planning on a Long Life with Longevity Insurance
One evening, years ago, I was fiddling around with a life expectancy calculator online and after running the numbers on myself, I decided to run through the program for my wife. Her problem was very different than mine (I’m on borrowed time already). According to this calculator, her life expectancy was 116! It made sense, there is a lot of longevity in her family and she doesn’t chain smoke or… Read More
11
Sep
2014
Avoid This Catastrophic Loss
Every now and then, I come across some research that really drives a point home. Yesterday, I found a terrific study by JP Morgan on what they called catastrophic losses – or what kids today might call ‘epic fails,’ which Urban Dictionary defines as: a complete and total failure when success should have been reasonably easy to attain. In the JP Morgan study, a catastrophic loss is defined as a… Read More
10
Sep
2014
It’s a Bird, It’s a Plane, It’s Smart Beta
Speaking of hot topics, the investment community is abuzz with a new term: smart beta. The term is gaining increasing popularity and the current edition of Institutional Investor magazine has a lengthy article (and series of ‘sponsored content’ pages) on the topic. Despite the popularity of the phrase in the industry right now (I do think it’s a fad, but I will get to that in a minute), let me… Read More
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
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
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
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
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