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While the academics and money managers argue over the pros and cons of active vs. passive strategies investors often ignore the noise and focus solely on returns. “Did I beat the S&P 500? Good.” That’s all some people seem to care about. What a shame. Prudent investing requires a full and complete understanding of what [...]
Fundamentals be damned. Throw away that lucky rabbit's foot. No need to waste time with that nonsense since stocks are "guaranteed" to go up from their current level. How do we know? Take a look at the following table: 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter 1944 low high 1948 low high 1952 low [...]
It’s been well documented that the pain of loss exceeds the joy of gain. It logically follows that most investors would prefer to outperform a benchmark during a bear market (i.e. lose less) than a bull market (i.e. earn less). Seems intuitive. If markets are up 20% and you earn 15% you’re happy you’re making [...]
Since the start of the COVID pandemic (Jan 2020) the S&P 500 has provided a total return (inclusive of dividends) of roughly 28%. That’s about 10%/yr and on par with the average annual ROR of the index. That’s some forest! . . . and yet many people are hyperfocused on individual trees: lockdowns supply [...]
Concerned about stock market performance if Joe Biden wins the White House and the Democrats take a majority in the House and Senate? History suggests maybe you shouldn’t be. Dating back to 1951 there have been eighteen years in which the Democrats controlled the legislative branch. in fifteen of those eighteen years (83.3% of the [...]
The income side of fiscal policy (i.e. taxation) is always highly politicized. The song never seems to change. Republicans think everyone pays too much. Democrats think everyone pays too little. An oversimplification? Maybe. Nonetheless a basic understanding of the proposals independent of the emotionally-charged rhetoric can go a long way towards achieving Thomas Jefferson’s view [...]
Realizing that in 2020 we speak in silly absolutes (e.g. if you aren’t outraged that your toaster has darkness settings then you are racist) we’ll preface this post with the following: We’re apolitical. We don’t care. Democrat or Republican. Whatever. Can we all just get along? Anyway... Back in 2016 we wrote about the Delaware [...]
Feb 2020: The S&P 500 hits an all-time high before the COVID-induced selloff. Aug 2020: The S&P 500 recovery is complete as the index sets a new all-time high. A funny thing happened along the way that’s not captured in the above graph. Earnings and projected future earnings fell off a cliff – the [...]
Although the SECURE Act (“Setting Every Community Up for Retirement”) was largely focused on retirement rules (e.g. changing RMD age from 70 ½ to 72) several provisions were included that impact an important way many of us save for the education of our children. So-called §529 plans – a tax-deferred and possibly tax-free means of [...]
The current COVID-19-induced economic and financial shocks aside there are some fascinating trends developing in the United States with equally fascinating socioeconomic implications. OBSERVATIONS People are angry. It isn’t hyperbole to suggest the country has never been more divided at any other point in time but for the issues of slavery and states’ rights in [...]