“Sell in May and go away” is a rhyming market-timing slogan that may never… go away. Here’s a graphic that seems to support the idea that stocks have historically performed much worse between May and October than the rest of the year. Credit to Reuters/Scott Barber via Abnormal Returns. Data set is the MSCI World [...]
I’ve written a little bit in the past about including small-value stocks to your investment portfolio. “Small” means companies with a relatively smaller market cap (total market value) – definitions vary from being the bottom 10% by capitalization or being worth less than $1 billion. “Value” stocks are those that tend to trade at a [...]
Here’s a slightly updated and revised version of an older post I had on rebalancing a portfolio to maintain a target asset allocation. What is Rebalancing? Let say you examine your risk tolerance and decide to invest in a mixture of 70% stocks and 30% bonds. As the years go by, your portfolio will drift [...]
Asset allocation (AA) is an important part of portfolio design, and I like pinning down a target asset allocation for personal reference. This helps keep me focused as my portfolio shifts over time and makes it easy to re-balance back. For some educational posts on this topic, please refer to my asset allocation starter guide. [...]
Another theory of predicting future stock market returns states that there are three main components to long-term stock market performance. Amongst many others, I learned this from authors and investors Jack Bogle and William Bernstein. Part 1: Dividend Yield If your stock distributes 2% in dividends each year, then you will have a 2% contribution [...]
There a regular poster on the Bogleheads forum called Adrian Nenu who always posts the following, which is said to have origins with author Larry Swedroe. Tolerable Loss x 2 = Equity Allocation < 50% I don’t know if I agree with the last part that says that your equity position should always be less [...]
Here are some neat links from readers and interweb wanderings. I want to expand on them later as well. Petrofix: Hedge and cap gas prices A website that will let you control your cost of gasoline in the near future – for a price. If gas prices rise, they pay you the difference. If they [...]
Due to the current market conditions, many investors are wondering if investments in gold should be added to their portfolios to hedge against future inflation risks. In the video below (direct link), author Larry Swedroe discusses why he thinks gold is not an appropriate hedge against inflation, as well as some alternative investments. The debate [...]
Larry Swedroe, principal of an asset management company and investment book author, also posted his Lessons That 2008 Taught Us In 2008 on SeekingAlpha. It was a nice compilation that covered a variety of topics from active management to Madoff to your “Plan B”. Here are some excerpts of a few lessons involving investing and [...]
I’ve been getting back into reading financial books, but am really behind in writing reviews for them. One book I finished last month was Wise Investing Made Simple by Larry Swedroe, which promises “Tales to Enrich Your Future”. The key word is “tales”, because this is not a book with complex mathematical formulas or lots [...]
So how did everyone do in their March Madness pool? In the book Wise Investing Made Simple by Larry Swedroe, there is a great explanation of why stock-picking is very difficult which incorporates sports betting. I’ll try to briefly paraphrase the idea here. Sports Betting Basics Let’s stick with college basketball. Earlier this season, Duke [...]
Here are some more links from my weekend reading: Nina of Queercents found out the hard way that Home Equity Lines of Credit (HELOCs) can be revoked! It was done because her property value had dropped significantly, which makes sense. But not only was it through no adverse action of her own, she had to [...]
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