3 Reasons Investors Should Update Their Investment Policy Statement

Just as regular health checkups with a qualified physician are an important proactive step to maintaining your physical health, regular financial checkups with an experienced financial advisor are an important proactive step to maintaining good financial health.
 
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Follow a Forecaster or Flip a Coin?

This blog was originally published in December, 2014
 
Do you have a favorite forecaster? If so, when is the last time you checked his or her track record? You probably should because research exists that shows professional forecasters are about as accurate, on average, as a coin flip.
 
The chart below is the result of an ongoing analysis of equity market experts and their forecasts — the so-called stock market gurus. Analysts collected data from market forecasters since 1998. They tracked and graded the forecasts, based upon accuracy, made by dozens of popular gurus over the years. And the results aren’t good! The “experts” accurately predicted market directions only 48% of the time — about as accurate as a coin flip. Continue reading

Could You Be Your Own Worst Enemy?

This blog is from the September issue of Portfolio Perspectives.
 
“The investor’s chief problem — and even his worst enemy — is likely to be himself.”

 
— Benjamin Graham, The Intelligent Investor, 1949
 
The U.S. stock market (measured by the S&P 500) was down more than 5% two days following the historic Brexit vote. Investors sold out of stocks as it seemed the market was on course for a global market correction. Yet, only five trading days later the market was near its pre-Brexit level. I believe the panic was unwarranted and investors succumbed to their emotions yet again.
 
Why do so many investors make investment decisions based upon emotional reactions to short-term events? One possible answer: Because we’re human. It’s normal to feel anxiety during economic downturns or market turmoil — like Brexit — but acting upon those anxieties can lead to imprudent investment decisions. The key is not letting your emotions get in the way of your long-term investment plans. Continue reading

What Many Investors Get Wrong About “Average Returns”


This blog is from the June issue of Portfolio Perspectives.
 
You come to the edge of a fast-flowing river and want to get to the other side. You read the sign conspicuously posted at the water’s edge — “average depth 3 feet.” Feeling confident, you begin to wade across the river. Midway across you fall into a deep hole and get swept down the river. Continue reading

A Different Way to Look at Your Morning Coffee

coffee cup with hot esspresso on old tableWe hear a lot of talk these days about what isn’t working in our country, and how to fix it. But let’s take a break from all the political drama and remind ourselves about what is working: Capitalism.
 

While Capitalism is not a perfect system, it is a great creator of wealth, progress and innovation. Continue reading

The Effect of Diversification

Source: Morningstar Direct 2016.   Past performance does not guarantee future results. Indexes are unmanaged baskets of securities in which investors cannot directly invest; they do not reflect the payment of advisory fees or other expenses associated with specific investments or the management of an actual portfolio.   Stock investing involves risks, including increased volatility (up and down movement in the value of your assets) and loss of principal.   Bonds are subject to market and interest rate risk. Bond values will decline as interest rates rise, issuer's creditworthiness declines, and are subject to availability and changes in price.

Source: Morningstar Direct 2016.
 
Past performance does not guarantee future results. Indexes are unmanaged baskets of securities in which investors cannot directly invest; they do not reflect the payment of advisory fees or other expenses associated with specific investments or the management of an actual portfolio.
 
Stock investing involves risks, including increased volatility (up and down movement in the value of your assets) and loss of principal.
 
Bonds are subject to market and interest rate risk. Bond values will decline as interest rates rise, issuer’s creditworthiness declines, and are subject to availability and changes in price.

This blog is from the May issue of Portfolio Perspectives.
 
“Don’t put all of your eggs in one basket.”
 
You’ve probably heard this old saying used on more than one occasion to emphasize the need for a diversified portfolio. Continue reading