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Intra-Year Market Drops vs. Year-End Results

Although investors claim to accept market fluctuation as normal we find precipitous selloffs overwhelming.  Why? . . . because they happen rapidly and randomly. Lost in the sea of emotion is that equity market annual returns have been mostly positive despite significant market declines in each year.  Since 1980 the average intra-year pullback in the [...]

Irrational Exuberance – Bull Market vs. Investment Mania

Semantics?  No! Bull markets end when the smart money (i.e. buying based upon fundamentals) changes its perception of earnings growth.  Markets “crash” when the dumb money (i.e. buying based upon recent performance) will no longer chase prices higher than already inflated levels. Where has the smart money been?  It’s followed businesses benefiting from increasing earnings, [...]

401(k) Company Match on the Rise for Wrong Reasons

As companies shift away from defined-benefit retirement plans (i.e. we’ll pay you $x per year for the rest of your life) towards defined-contribution plans (i.e. you contribute x% per year) an inducement for employee participation is the company match.  It’s that free money 100% ROR of which we’d be foolish not to take advantage. One [...]

End of the Stretch IRA?

The powerful tax-deferral tool is likely nearing its end. WHAT IS STRETCHING: Sustaining and maximizing the tax-deferred status of an IRA when the beneficiary is a non-spouse such as a child. WHO LIKES IT: Beneficiaries who accrue years of compounded, tax-deferred growth while minimizing the Present Value of the liability (i.e. $1 in the future [...]

One Chart – 120 Years of the Dow Jones Industrial Average

As one of the oldest and best-known indexes the DJIA is not only a benchmark for the world’s largest stock market but, also, a barometer of global confidence.  This chart details the DJIA’s performance since 1896.     It’s interesting to note how the highs and lows have reflected the U.S. economy. Greater still is [...]