Panic is Not An Investment Strategy

U.S. stock performance was up ~6% in March, lifting equities out of correction mode after January’s sharp sell-off. But is that enough to restore the investor confidence that’s been lost? Volatile times like these can make or break successful investment strategies.

Shattered investor confidence can lead to a self-fulfilling prophecy, like bear markets or corrections, even as leading economic indicators are signaling a much less dire scenario. Continue reading “Panic is Not An Investment Strategy”

As Bull Market Reaches Seven Years Old, It May Still Have Years to Run

Stocks had a rough year in 2015 and face a number of challenges in 2016, including rising interest rates and a strong U.S. dollar. That doesn’t mean we’re not still in a secular bull market* where 2015 is the pause that refreshes before stocks continue grinding higher.

Since bottoming in early 2009, $15 trillion has been restored to share prices as stocks tripled in value over the ensuing 82 months. At 7 years old, some market pundits argue the current bull market is long in the tooth, and if history is any indicator, must inevitably die of old age. Supporting this argument is the fact that no bull market in history has ever exceeded 10 years. This viewpoint, however, ignores the possibility of a longer lasting secular uptrend consisting of larger bull markets and smaller bear markets.

Continue reading “As Bull Market Reaches Seven Years Old, It May Still Have Years to Run”

Required Minimum Distributions

What is an RMD?

A Required Minimum Distribution is the minimum annual amount that must be withdrawn from tax-deferred (qualified) accounts after an individual turns 70 I/2. RMDs are a way for the government to recoup the taxes that have been deferred for years, perhaps decades, in individual investors’ tax-deferred retirement accounts.

What accounts are subject to RMD?

 Any traditional IRA, SIMPLE IRA, SEP IRA or other tax-deferred retirement account, such as a 401(k), 403(b), Profit Sharing Plan, or Deferred Compensation Plan. Roth IRAs are not subject to RMDs.

When do I have to begin taking my RMD?

 When an individual turns 70 1/2 (6 months after their 70th birthday) they must begin taking distributions from their qualified account(s). They have until April 1st following their “half birthday” to take the first distribution. After that, it must be taken annually before year end.

Continue reading “Required Minimum Distributions”

The ABC’s of Exchange Traded Funds and Traditional Mutual Funds

When an investor opens their portfolio statement, they may see both traditional mutual funds and exchange traded funds (ETFs) in their portfolio. These are common investment vehicles, yet few investors understand the differences between the two, or how a professional money manager can help them navigate the intricacies of fund options.

The similarities of the two fund types are easy: both are baskets of stocks, bonds, or other assets – and they allow investors a relatively inexpensive way to diversify their portfolios. The differences appear in how the two types of funds trade, and the breadth of their respective holdings.

Mutual funds are the elder of the two types of funds, having been around since the 18th century. Partially because these funds have been around longer, there’s a good chance an investor can find a mutual fund with at least some coverage of the market area she/she wants to invest in. For more popular investments (e.g. technology), there are many mutual funds that hold similar assets. An added nuance of mutual funds is that they only trade once per day, at the end of the trading session – regardless of what time investors hit the “buy” button! This might not sound like a big deal, but it’s akin to committing to the purchase before you know the price…not an ideal situation for any investor.

Continue reading “The ABC’s of Exchange Traded Funds and Traditional Mutual Funds”

There’s No News Like Bad News

Wall Street forecasts for global GDP growth, earnings, and stock prices run the gamut for 2016. That means there are intelligent, well-reasoned analyses for both optimism and pessimism regarding where stock prices are headed. Why then, do negative headlines garner more attention and airtime?


The answer lies in a 1979 Nobel Prize winning study showing the overwhelming majority of investors dislike investment losses more than they like investment gains. This is the investing version of human history where threats to our survival have always been more urgent than opportunities to do something more than just “survive.” Be a pessimist and you’re a market sage who manages to peer past the obvious. Conversely, optimists, like Wharton Professor Jeremy Siegel, personify those negatively viewed as “perma-bulls” for traditionally positive outlooks of the stock market – a view Professor Siegel has held since the 1980’s. An inconvenient truth for the pessimists though; since the 1980’s the S&P 500 has increased in value 1,573%. Absolutely, it pays to invest with caution, but don’t let too much pessimism keep you from making money.