I was recently speaking with a colleague in the advisory business. The conversation turned to greed. We both share a fascination with the CNBC programAmerican Greed. The program chronicles investment scams, with touching portrayals of victims. The scams have a common thread: the promise of huge returns with little risk. Often the returns are “guaranteed”…
Most of the market news you hear tends to be about stocks, but bonds are just as useful a tool for most investment portfolios. One type in particular, the municipal, or “muni” bond, remains very popular. These bonds are issued by local governments, they’re often tax-exempt and they can be relatively low risk. But muni…
Seth Allen, Dean of Admissions and Financial Aid, Pomona College, Claremont, Calif. College essays carry far more weight than they have in previous decades. With a record number of students applying for college, admissions offices have become highly selective when considering student applications. While each school has its own criteria, schools typically look for students…
When you were a child, did you ever play the board game Life? In the very beginning of the game, each player has a decision to make: Do they enroll in college, or head off into the work world? Heading into the work world meant making money right away, however, college meant student loans and…
March has truly gone mad as the inimitable Warren Buffett has teamed up with Quicken Loans to produce perhaps one of the most brilliant marketing boondoggles and at the same time one of the most bogus prize offers ever devised. And it will almost certainly work beautifully with no one to claim the reward. The…
Abraham Lincoln first ran for the Illinois General Assembly in 1832. He lost. Subsequently, he lost a race for the House of Representatives and two races for the Senate. The love of his life died in 1835. He had a nervous breakdown in 1836. He campaigned for a vice-presidential nomination and lost. He persevered and,…
“My name is Neal, and I’m a lane changer. It’s been two weeks since I changed lanes — and that’s only because it’s been two weeks since I was on the highway!” If there were an organization similar to Alcoholics Anonymous for chronic lane changers, I would join. I know I have a problem, but…
In our ongoing series looking at asset allocation issues, we’ve already covered some essentials, namely, how to analyze your ability, willingness and need to take risk — and what do when one or more of those factors conflict. Figuring out where you fit along the risk spectrum will help you figure how much of your portfolio to put into stocks. Now,…
In order to rationally develop an investment plan you need to estimate long-term returns for the asset classes in which to invest – without doing so you cannot determine how much to allocate to risky stocks and how much to safer bonds. When estimating returns we know that current valuations provide valuable information. As good…
I recently came across an article on Seeking Alpha by The Statistical Investor entitled “Demographics Are Destiny: World Population Trends“. The article begins: “As they say, demographics is destiny. Just ask Japan. The longer your investment horizon, the more exposed you are to demographic trends.” The author continues with what we might call “conventional wisdom”…
The presence of regularly occurring anomalies in conventional economic theory led to the development of the field of behavioral finance, and the volatility anomaly is one that deserves some special attention. Anomalies directly violate modern financial and economic theories, which assume rational and logical behavior. We now have a laundry list of anomalies, including…
It’s long been known that many investors have a preference for cash dividends. But from the perspective of classical financial theory, this behavior is an anomaly. Here’s why. It’s perplexing behavior because before taking into consideration what are referred to as “frictions” such as transaction costs and taxes, dividends and capital gains should be perfect…
I frequently get asked about the merits of corporate bonds, both investment-grade (IG) and high-yield (HY), relative to government and municipal bonds. I don’t believe the risk-return profile for long-term investors (particularly taxable individual investors) is improved by owning IG or HY corporate bonds compared with simply owning a diversified portfolio of stocks and high-quality…
It used to be that once Americans neared retirement, they had whittled down (or eliminated) their debt. Freed from monthly principal and interest payments, these fortunate individuals were prepared to retirewith dignity. Times have changed. Read the rest of the article on US News.
Most Americans have a high regard for our Canadian neighbors to the north. We respect their honesty, their integrity and, especially, their civility. The statistics on crime in the U.S. and Canada show that Canadians live in a more lawful, peaceful society. Violent crime in the U.S. is appallingly higher per 100,000 inhabitants than in Canada. Murder…
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