Modern Portfolio Theory
Before shifting into further discussion about whether these historical numbers provide the most appropriate assumptions for future market performance, it is worth understanding how to choose an asset allocation and put together an investment portfolio while assuming that these historical numbers are the right ones to use. The more basic point is that any assumptions […]
Historical Market Returns – Part One
The primary subject of my book is comparing the risk premium with risk pooling as a source of funding for retirement goals. An important step is to first make clear what the risk premium is and how it relates to an investment portfolio. Fundamentally, investors prefer certainty to uncertainty. A bond provides a known yield […]
Overview of Stocks and the Stock Market
Stocks provide an ownership stake in a company. They provide access to company earnings based on its future performance. Companies can pay dividends to their stockholders to return profits to the owners, or they could reinvest profits into the firm to lay the foundation for better performance and even larger dividends to owners in the […]
The Coronavirus and Its Effects on the Market and Your Retirement
Just like many other areas of life, the novel Coronavirus is having a significant impact on the financial markets.
Two Philosophies for Retirement Income Planning Part One: Probability-Based
Within the world of retirement income planning, the siloed nature of financial services between investments and insurance leads to two opposing philosophies about how to build a retirement plan. There is an old saying that if the only tool you have is a hammer, then everything starts to look like a nail. This tendency is […]
The Yield Curve is Inverted. Don’t Panic.
Wednesday was another “interesting” day in the markets. The S&P 500 Index was down almost 3% on the day – and follows on the heels of last Monday, where the market was also down nearly 3%. It’s been an eventful week and a half. Rather than dissect what’s caused these drops (and annoy one half […]
What Does it Mean to Call China a Currency Manipulator?
Monday (August 5th, 2019) was a chaotic day for both the world economy and markets. We want to break down what’s happened, and how that will likely impact your investments.
Ignore the Financial Media
The financial media is omnipresent. Whether it’s hearing about what the Dow did today on your drive home, or a talking head pontificating about how the market’s are obviously about to tank, we are constantly immersed in a miasma of prognostication. Everyone has a take on what the markets will do next, and what you […]
Can TIPS Help You?
Inflation is one of the most pernicious risks facing retirees. While there are a lot of ways to manage inflation risk, TIPS, or Treasury Inflation Protected Securities, are one of the few investment options that directly hedge against inflation risk. They aren’t perfect, and there are certainly some things to consider when you use them […]
Should You Try Timing to Avoid Bad Markets?
WHAT IS OCCAM’S RAZOR? Occam’s Razor is a principle attributed to William Occam, a 14th century philosopher. He stressed that explanations must not be multiplied beyond what is necessary. Thus, Occam’s Razor is a term used to “shave off” or dismiss superfluous explanations for a given event. This concept is largely ignored within the investment […]
