A few weeks ago, I was in a meeting and someone said, “why talk so much about the bond market? Who cares?” Of course, we care about the bond market because 30 percent of the money that we invest is in bonds, so we are bound to keep track of it. And, as former bond traders, it feels natural. I understood the question, though, because the stock market is where… Read More
Even though value stocks have outperformed growth stocks this year by a solid margin, growth stocks are still running laps around value stocks when you look at the last five or ten years. The S&P 500 Value index, for example, was up 10.8 percent for the five years ending on Friday, and 12.0 percent for the last 10-years. While those returns are attractive in absolute terms, they are pretty paltry… Read More
Over the weekend, I was looking at some research from JP Morgan that showed the percentage weight of the top ten stocks in the S&P 500 over time, and I admit that I was surprised. When we started Acropolis, 20-years ago in August, the top ten stocks made up about 24 percent of the index. I thought that was pretty high back then and was one of the reasons that… Read More
On the last day of last year, the 10-year US Treasury closed with a yield of 1.52 percent. As noted above, it closed last week with a yield of 1.78 percent, an upward change of 0.26 percent, or in percentage terms, 17.1 percent higher. Short-term rates have not changed much so far, but the Federal Reserve has indicated that short-term rates could be at or above one percent by the… Read More
I wrote a lot about inflation in 2021 for pretty obvious reasons. I also wrote that bonds are difficult investments to own right now because the expected inflation rate over the coming decade is more than the current interest rates. After receiving a lot of inquiries about bond alternatives like REITs, utilities, and the like, I wrote an article shooting down those too. This article is a variant on that… Read More
This past Wednesday, the Bureau of Labor Statistics released the Consumer Price Index (CPI) data for October, which showed inflation on consumer goods growing at a rate not seen in thirty years. This concerning trend is illustrated in the chart below. The orange line tracks the annual growth rate of the CPI since the 1960’s. This line includes all prices and categories. The white line tracks the same index, but… Read More
Over the years, I’ve missed some wonderful returns on stocks that I thought were too expensive. I was an Amazon customer starting in 1999 (you can find your ENTIRE purchase history on the site), two years after they went public. I might have missed ‘the ground floor,’ but I was worried about their valuation. Tesla is another company. I know several people who bought them when they came out, and… Read More
Several years ago, I went to the movies and noticed a machine selling Bitcoin in the lobby. I’d read about Bitcoin and thought about buying one just to keep an eye on it. Then, I thought that $3,500 was an expensive night at the movies and just enjoyed the show. A year later, I went back, and the price had risen to $16,500 per coin, and I realized that night… Read More
Over the past few years, one of the more popular categories of mutual funds has been so-called ‘alternative’ funds. Alternative investments, broadly defined, are strategies that seek returns that are uncorrelated from traditional investments like stocks and bonds. While alternative investments were once largely confined to private partnerships, they are now popular in mutual funds, or what the industry refers to as ’40 Act Funds. Following the 2008 financial crisis, alternative mutual funds… Read More
Even if everything goes according to plan, we are probably stuck with zero percent on cash for the next few years. We’ve been in this situation for so long that it almost seems normal, and with some negative interest rates elsewhere around the world, sometimes zero even seems good (actually, it never does, but negative is just so bad). Earning nothing is so lousy that every once and a while,… Read More
