Allocations Aweigh

By |2017-09-29T10:15:09-04:00September 27th, 2017|Categories: Global Market Update|Tags: , |

What’s the right asset allocation? Public Domain. Source: Wikipedia In simple terms, asset allocation is the process of deciding where to invest your money. Not who to have manage it – like Vanguard or an advisor – but what to have your money invested in: stocks, bonds, real estate, bank deposits, commodities. Your asset depends on a couple of basic questions: what do you need the money for, when will you need it, what other resources you [...]

The Hidden Asset

By |2017-02-02T11:26:38-04:00February 1st, 2017|Categories: Global Market Update|Tags: , , |

What’s the asset that no one talks about? Photo: Bryan Hanson. Source: Morguefile When I discuss asset allocation, I usually focus on stocks and bonds. Bonds are a senior claim on a business’s cash flow, and stocks are a residual claim on cash flow. So stocks benefit from a business’s growth, but they’re riskier – they get wiped out if the business fails. Bonds are safer, but they don’t go anywhere. If everything goes right, you just [...]

Politics and Investing

By |2016-11-17T15:39:30-04:00October 31st, 2016|Categories: Global Market Update|Tags: , , |

Should politics impact our investing? Source: Wikipedia Many folks are concerned about the upcoming presidential election. The two major party candidates elicit strong reactions. Three quarters of those surveyed think it will have a big impact on their personal finances. And many folks are pulling out of the market in response to their fears of a Clinton or Trump presidency. Is this a good idea? It’s helpful to look at a little history. During the dot-com busty [...]

No Safety in Numbers

By |2016-11-17T15:39:35-04:00October 28th, 2016|Categories: Global Market Update|Tags: , , , |

When are sovereign bonds no longer safe? Global Yield Curves, 10-28-16. Source: Bloomberg For decades people have invested in stocks for growth and in bonds for safety. But the global financial crisis and its economic aftermath have changed that. Now sovereign bonds around the world have extremely low yields. 30-year bonds in the US yield just over 2.5%, and that’s the highest yield anywhere. You can get higher yields in emerging markets, but those come with currency, [...]

Incomes and Outcomes

By |2016-11-17T15:40:59-04:00September 23rd, 2016|Categories: Global Market Update|Tags: , , , |

What can investors do about low rates? Source: St. Louis Fed Low interest rate around the world are challenging investors and savers everywhere. And it isn’t just households: state and local pension funds—once fully funded—are now underfunded by almost $2 trillion. With expected returns so low, governments and employees are being called upon to increase their contributions to make up for the shortfall. The resulting strain on public budgets has led to credit-rating cuts in places as [...]

Consider the Alternatives (Part 1)

By |2016-11-17T15:42:58-04:00August 30th, 2016|Categories: Global Market Update|Tags: , , , |

What are alternative investments? Duck-billed platypus, an egg-laying mammal. Photo: Klaus. Source: Wikipedia Alternative investments are assets that don’t fit into the normal asset-class categories of stocks, bonds, or cash. They include private equity, hedge funds, managed futures, collectables, commodities, and so on. They’re related to the standard asset types, but they have a slightly different twist. So physical gold is an alternative investment, while gold mining company stocks are not. Real estate is an alternative investment; [...]

Why Trash Cash?

By |2016-11-17T15:56:19-04:00March 7th, 2016|Categories: Global Market Update|Tags: , , |

What good is cash? Photo: Aimee Low. Source: Morguefile Central banks around the world have pushed interest rates to zero. In Europe and Japan, short rates are negative. Bank deposits and money market funds pay almost nothing. Why should investors hold cash? Cash used to be thought of as a weapon, or a market sector. Mutual funds held up to 10% of their portfolios in cash. After all, cash allows managers to move quickly when they see [...]

Pension Problems

By |2016-11-17T15:56:24-04:00March 4th, 2016|Categories: Global Market Update|Tags: , , |

What’s wrong with our retirement system? State pension funding ratios. Source: It used to be that firms offered pensions as an employment benefit. They were structured to reward employee loyalty—the longer you stayed at a company, the higher the payout ratio when you retired. Then came the ‘70s and ‘80s, with massive restructuring and layoffs. What good was loyalty when the firm wasn’t loyal to you? Workers lost a good deal of their benefits, through no [...]

Bumps in the Road

By |2016-11-17T15:57:09-04:00February 24th, 2016|Categories: Global Market Update|Tags: , , |

There are frost-heaves ahead. Is your portfolio ready? Photo: Kevin Connors. Source: Morguefile At this time of year in New Hampshire we have to deal with frost heaves. Rain and melt-water from winter storms seep into the road-bed, then lift the road when the water re-freezes. How we deal with the bumps says a lot about what kind of people we are. Some folks sail blithely through, figuring that their car’s shocks can handle the stress. That’s [...]

Driving, Putting, and Asset Allocation

By |2016-11-17T15:58:21-04:00February 19th, 2016|Categories: Global Market Update|Tags: , , |

“Drive for show, putt for dough.” Bob Hope putting in the Oval Office. Photo: Oliver Atkins. Source: National Archives. That’s an old golf saying – attributed to Bobby Locke, the South African golfer dominant in the ‘40s and ‘50s. He won the British Open four times in eight years. He was so good that he was banned from the PGA Tour. He didn’t drive the ball very far from the tee, but on the putting greens he [...]