Jeremy Grantham, of asset management firm GMO, is one of the most insightful ‘deep thinkers’ in the financial world. His outlooks have also proven remarkably accurate through the years. In his latest essay (free registration required), Grantham takes on the issue of commodities prices. His piece is long and detailed, and the issues he raises are of considerable importance (whether or not you actually agree with his conclusions). (more…)
Archive for April, 2011
Posted in Asset Allocation, Market Timing, tagged AdvisorShares DENT Tactical ETF, demographic investing, DENT, Harry S. Dent, IEZ, IGE, Jason Zweig, Jr. Harry Dent, Rodney Johnson, RSP, Tactical Asset Allocation, VO, XME on April 21, 2011 | 3 Comments »
Since the market turbulence of the late 2000′s shot investors’ faith in more traditional investing, there’s been quite a lot of discussion of Tactical Asset Allocation.
This form of investing focuses on allocating certain portions of your portfolio to different asset classes, and then ramping up or pulling back on any one of those classes depending on certain factors. The most common of those factors is valuation: if stocks, for example, start to look very cheap based on historical metrics (like price to earnings ratios) you might load up on those. World events might drive some sector rotation as well. Uncertainty in the oil producing regions of the world might convince an investor that there could be an economic slowdown brewing and push them to put more into cash.
Doubts About Tactical Asset Allocation
In a way, it’s a middle ground between trying to pick individual winning stocks and hands-off investing, which focuses on the long term and minimal trading. The problem is, it’s hard to consistently do well. (more…)
(photo:Jing a Ling)
If I were leaving for college next week (and oh how I wish I were!) how much better my student money, or lack of it, might be managed second time around, with the help of Mint.com.
Hip 19-year-olds are already talking about it, alongside Facebook and Twitter and all the other must-have-at-my-fingertips websites and apps. (The site now has 4 million users.) Ten minutes spent tapping your information into the Mint.com website, and you can have instant access to the state of your finances. All at once, you can see how much you have in the bank, how much you owe, how much you’re over budget already, and why you really should spend what’s left on textbooks rather than iTunes.
But now that I’ve grown into the kind of person who pays her bills on time and reliably remembers to call her mother, can Mint really be trusted? And what can it do for me? (more…)
Posted in ETFs, Financial Advisors, Global Investing, Portfolio Investing 101, tagged Austin Wealth Specialists, Darlene Gilmore, DBA, Emerging Markets, ETFs, EWX, Global Investing, international investing, KO, MCD, Mint, MOO, VWD on April 12, 2011 | 1 Comment »
Political turmoil in the Middle East and Africa, a natural and nuclear disaster in Japan, rekindling European debt crises: It’s easy to understand why investors may shy away from investing in foreign stocks these days.
They may be making a mistake.
Reluctant Global Investors
“There’s so much fear out there,” says Darleen Gilmore, founder of Austin Wealth Specialists, an investment advisor who likes clients to put a certain percent of their holdings into global markets. “I have to ease them into it.” (more…)
Posted in Diversification, Portfolio Investing 101, tagged AAR, Alpha, Average Annual Return, Beta, CAGR, Compound Annual Growth Rate, Compound Annual Return, correlation, diversification, FAIRX, JKI, portfolio measurement, portfolio performance, R-squared, R2, Total Return on April 7, 2011 | 1 Comment »
So what are the important measures and what do they mean?
I dove into this topic yesterday with a discussion of two important measures: Volatility and Beta. Today I’ll add six more to watch.
There are a large number of statistical measures available for looking at a mutual fund, ETF, stock or a combination of these in the total portfolio.
For an individual investor, what are the important measures and what do they mean? Over the next two days I will highlight the measures I think are critical to understanding and managing your investing portfolio.
Today, I’ll start with the best measurement of risk in any investment – its volatility. (more…)
Posted in Asset Allocation, Long-term investing, tagged asset allocation, Calpers, investment rate of return, NASRA, National Association of State Retirement Administrators, pension, Wilshire Associates on April 4, 2011 | Leave a Comment »
What rate of return can we realistically expect from our investments?
7%? 8% 12?!
This is no academic brain teaser to anyone saving for retirement or a down payment. It’s not easy to get right, and getting it right is critically important.
Guess too low, and you end up with a dour view of your chances of making your financial goal. Guess too high, and you could end up in dire straights.
If it’s any consolation to the amateur investor, the pros often can’t agree on rate of return either. (more…)