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
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
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
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
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
25
Aug
2014
Janet Yellen and the Ice Bucket Challenge
President Harry Truman apparently once quipped, ‘give me a one-handed economist’ because his advisors would start by saying, ‘on the one hand’ and then begin their concluding remarks a few minutes later with, ‘on the other hand…’ In that sense, Janet Yellen’s speech on Friday was two-handed with a little something for everyone, saying both that the labor market is still suffering from the 2008-2009 recession and that interest rates… Read More
22
Aug
2014
The Bull Market That Won’t Die
This is the bull market that just won’t quit. Just a few weeks ago, when stocks dipped it appeared we were finally getting the correction that we’ve all collectively been expecting for years now. It’s unusual to go this long without a 10 percent correction or a 20 percent drop, which is the typical definition of a bear market. The decline that we just went through was less than four… Read More
21
Aug
2014
Mutual Fund Fees Matter
As I mentioned the other day, I’ve been thinking a lot about what’s changed over the years here at Acropolis. Three years ago, we made our first investment in open-ended mutual funds. We were early adopters of exchange traded funds (ETFs) that operate like mutual funds in some ways but are a little more tax efficient, offer liquidity during the trading day and are often slightly less expensive. Today, we’ve… Read More
20
Aug
2014
Avoiding Risk Can Be Risky
In my opinion, one of the most amazing stories this year is the surprise drop in interest rates. The 10-year US Treasury note started the year at three percent and nearly everyone, including me, expected interest rates to rise this year (but for the short end, which is controlled by the Fed). Today, the 10-year closed at a yield of 2.40 percent and closed as low as 2.34 percent last… Read More
19
Aug
2014
Not All Indexes Are Created Equal
Acropolis will turn 12 in less than 10 days and I can’t help reflect on what has changed over that time and what has stayed the same. Since the beginning, we’ve used index funds, but the way we use them has changed fairly dramatically in some cases. Take small cap stocks, for example. A dozen years ago, we used exchange-traded-funds (ETFs) as the core component of our small cap allocation… Read More