Following the Tornado, Risk is on My Mind

19 May 2025

On Friday, an EF-3 tornado hit St. Louis County and City. At least five people passed away, and thousands of homes were damaged, some beyond repair. Although the official National Weather Service report isn’t complete, initial reports suggest that the tornado likely formed in Clayton, moved northeast through Forest Park, DeBaliviere Place, Fountain Park, the Greater Ville, O’Fallon Park, and crossed the Mississippi into Illinois. My home is in DeBaliviere… Read More

By

Concentrated Risks Rising

29 Apr 2024

We’ve all heard that the S&P 500 is more concentrated than it has been in decades. Indeed, the top 10 holdings in the S&P 500 now account for a whopping 33.8 percent of the index. That’s right, ten of the 500 stocks in the index equal more than one-third of the value of the index. I’m a fan of global diversification, but it’s been a frustrating decade, given how well… Read More

By

Feel Like Taking Risk? So Does Everyone Else

01 Apr 2024

Last week, I showed four charts that all said the same thing: US stocks are a little expensive when compared to fundamentals (click here to read the article). You could fairly accuse me of saying the same thing this week, but this time, I’m using the bond market. The chart below shows the spread (or difference) between high-yield bonds. High-yield bonds, also known as junk bonds, are issued by companies… Read More

By

The Risk of Stagflation

05 Dec 2022

Way back in March, I wrote about stagflation, an economic state with high inflation, unemployment, and slow economic growth. I grade my own articles on a curve, and I give that one a C because I didn’t talk much about stagflation, instead writing about the related Misery Index. Two or three weeks ago, I saw a thematic ETF launched that is designed to benefit from periods of stagflation which got… Read More

By

I Finally Bought Bitcoin

25 Oct 2021

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

By

Risk & Volatility

18 Mar 2019

Using the words ‘risk’ and ‘volatility’ interchangeably is one of the bad habits of many financial professionals, myself included.  When pressed, we know better, but we make this mistake all of the time nonetheless. Merriam-Webster has four definitions of risk as a noun, two of which are applicable here: ‘the possibility of loss or injury,’ and ‘the chance that an investment (such as a stock or commodity) will lose value.’ Volatility, according to Merriam-Webster,… Read More

By

Retelling the Story of Concentration Risk

23 Apr 2018

My wife and I were both very fortunate to have inherited some money. When we got married, almost 19 years ago, we found out that about 10 percent of our combined net worth was in General Electric (GE) stock. It was the largest position for both of us, actually. I received the stock when my grandfather died, which was right around the time that Jack Welch took over as the… Read More

By

Getting to Know Your Volatility

14 Aug 2017

After a summer of historically low and realized volatility in the market, we finally saw a sharp spike in volatility as tensions rose between North Korea and the US last week. While the exact cause and timing behind the volatility could not have been predicted, we did know that the low levels of volatility would not continue forever. Whether or not volatility is back for a while, it is always… Read More

By

Equity Risk Dominates Your Portfolio

31 Oct 2016

When I describe ‘balance’ in a portfolio, here or in person, I am almost inevitably talking about an allocation that is somewhat evenly split between stocks and bonds.  I don’t have to specify that I am talking about how much money is in each allocation (forgetting for a moment all of the sub allocations). In recent years, however, some investment managers have pointed out that a portfolio that is evenly… Read More

By

Avoiding Risk Can Be Risky

20 Aug 2014

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

By