8 Aug 2022

Warren Buffet

I heard an amazing statistic a few weeks ago: Berkshire Hathaway, Warren Buffett’s investment vehicle, could lose 99 percent of its value and still enjoy a track record that beats the S&P 500. Over the weekend, Berkshire released their second-quarter earnings, which reminded me of my newfound fact, so I pulled up the data. Sure enough, it’s true. And perhaps even more remarkably, it’s been consistently true since the year… Read More

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11 Jul 2022

Value’s Long and Winding Road

In a bear market like this one, when stocks are down -20 percent and bonds are down -10 percent, it’s hard to find good news. I learned a long time ago that in an up market, investors care about relative returns (earning 12 percent versus 10 percent, for example), but in a down market aren’t interested in that at all (losing, say, -8 percent instead of -10 percent). In both… Read More

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25 Apr 2022

Now Showing on Netflix: A Cautionary Tale

Although earnings were reasonably good overall last week, there were some standouts both to the upside and downside. But the winner for biggest earnings news went to Netflix (ticker symbol: NFLX). The company reported earnings of $3.53 per share, which was well better than analyst expectations of $2.91 per share, and the company’s own guidance, which was for $2.86 per share. But Netflix also said that they had lost subscribers… Read More

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18 Apr 2022

Socially Responsible Investing

There is a lot of hype in our industry about ESG investing, which is the new way to talk about socially responsible investing (SRI). The new name, ESG, stands for Environmental, Social, and Governance. The last time I wrote about socially responsible investing was in 2014, and you can read the article here. I wrote that we don’t use ESG funds (which I called SRI back then) unless clients direct… Read More

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21 Mar 2022

Visualizing Market Losses Today

I’ve been accused of repeating myself, and, in truth, it’s a fair accusation. Today I want to show a chart that I’ve shown before. Instead of showing the total growth of the stock market over time, where the good drowns out the bad, I want to highlight the bad. I don’t want to scare anyone; I actually think it’s reassuring. The measure I’m showing is called a drawdown, which shows… Read More

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7 Mar 2022

Russian Exposure in Your Portfolio

Our exposure to Russian stocks is very low, and we don’t have any exposure to Ukrainian stocks. To figure out our exposure, I looked at our holdings as of Friday and found that we have 2.6 percent of all of the money outside of the 401k plans that we manage in emerging markets stocks. Although we hold more than a dozen diversified emerging markets-based mutual funds and ETFs, 92.2 percent… Read More

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14 Feb 2022

Looking Forward, Value is Easier to Own

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

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18 Jan 2022

Interest Rates & Tech Stocks

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

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20 Dec 2021

Alternatives are Tough

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

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19 Jul 2021

How Many Stocks is Too Many?

Warren Buffett once said that ‘diversification is protection against ignorance. It makes little sense if you know what you’re doing.’ I’m a Buffett fan, but this quote always bothered me because we know what we’re doing and we’re highly diversified. The question of how many stocks you need to have a diversified portfolio seems less asked today than it was when we got started 20 years ago, perhaps because you… Read More

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