Investment Management
How Often Should I Rebalance My Portfolio?
The market is going to drag your portfolio through every mud puddle it finds. It’s your job to pick your portfolio up, dust it off, and point it back in the right direction. Rebalancing brings your portfolio back into line, and ensures that you are taking the right amount of risk through time.
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Occam’s – How Do Interest Rates Affect Stock Returns?
The financial media loves to talk about interest rates. There are a lot of good reasons for this, but two of the big ones are that interest rates are really important, and they’re relatively understandable and have a direct connection to most…
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What Does the GameStop Kerfuffle Mean?
It’s been a pretty wild ride with GameStop. But while there has been a lot happening, does it actually mean much? We’ve examined the details of what happened elsewhere, so I’m going to focus on some of the bigger questions that this…
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What Happened With GameStop?
It’s a bit of an understatement to say that GameStop has been in the news lately. There are a lot of people opining about what is going on, but we want to cut through that and look at what actually happened (we…
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A Guide to a Conservative Return Assumption
A simple approach for building a financial plan is to decide on a rate of return for the investment portfolio and to plug that value into a spreadsheet to represent assumed asset growth. Historical data may be used to calculate historical average…
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Planning For The Future – What About Bond Yields?
Adjustments for Current Bond Yields An important consideration is that current interest rates are lower than the historical averages. The historical average return is not relevant for someone seeking to estimate future market returns from today’s starting point. The general problem with…
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What To Do When Markets Plummet – Investor Behavior Gap
Another concern is whether investors are disciplined enough to stay the course with the investment strategy in order to earn the underlying index market returns. Studies on retirement spending from investment portfolios typically assume that retirees are rational investors who rebalance right…
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Making Your Investments Work For You: Things To Consider
Inflation We must remove inflation so the numbers allow for a better understanding of purchasing power growth. Real returns will be less because they preserve the purchasing power of wealth over time. Providing the discussion in terms of real returns allows us…
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How Much Should We Depend On The Stock Market?
Simple analyses, which look to historical returns as estimates for what retirees should expect in the future, tend to provide an incomplete picture that may overstate the potential for stocks relative to other strategies. We will investigate some of the adjustments that…
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Inflation, Deflation, Confiscation & Devastation- The Four Horsemen Of Risk
Noted financial advisor and historian William Bernstein makes a compelling case for stocks in his e-book Deep Risk: How History Informs Portfolio Design. In the introduction, Bernstein begins by offering an operational definition of risk. Risk is the size of real capital…
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The Case for Stocks
The case for using an aggressive investment portfolio with a high stock allocation to fund retirement expenses rests on the idea that it will probably work. Stocks are expected to outperform bonds, and if and when that happens, a retiree will be…
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Modern Portfolio Theory – Part Two
This article is part of a series; click here to read Part One. Efficient frontier diagrams do not actually show the asset allocations of portfolios on the efficient frontier, but this information is also available. Exhibit 1.3 provides an example of ten…
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