Monthly Archives: July 2012

What is Your Pension Really Worth?

Last week, we posted an article from Michael Lewitt, Vice President and Portfolio Manager at Cumberland Advisors called “The Pension Dilemma” that talked about how America’s largest pension fund, the California Public Employees Retirement Systems (CALPERS) reported an abysmal 1% return on its investments for the past year (ending June 30, 2012).

CALPERS has been in the news lately for several reasons:

  1. The California state pension is a bellwether for other state-run retirement systems across the U.S. that are also forced to face one of the most challenging periods in history: low interest rates, volatile markets and slow economic growth.
  2. CALPERS missed their own internal targets by more than 7.2% and then blamed their underperformance partly on picks made by individual investment managers (which CALPERS declined to name).
  3. The CALPERS underperformance has shaken the confidence that many investors have in their own pension funds.

What Does This Means for the Average Investor?

Retirement planning is a passion for us here at the Portfolioist. Yes, go ahead and laugh at the use of the word “passion” if you must—but that’s how we truly feel—especially in these turbulent economic times. Continue reading

The Pension Dilemma

Guest Post by Contributing Editor, Michael Lewitt, Vice President and Portfolio Manager, Cumberland Advisors. We thought this was an interesting article and thought our readers would too. Enjoy.

America’s largest pension fund, the California Public Employees Retirement System (CALPERS), reported a 1% return on its investments for the 12 months that ended June 30, 2012.  This disappointing return fell woefully short of the plan’s target return of 7.5%Continue reading

Emerging Market Indexing

Guest post by Matthew Amster-Burton, Mint.com. We thought this was an interesting article and thought our readers would too. Enjoy.

Let’s say you want to build your own stock market index fund based on the S&P 500. Easy: download a list of all the companies in the index–from 3M (MMM) to Zions Bancorp (ZION) and their market cap, and start investing. Every stock in the index will be easy to buy in whatever quantity you want.

Now, after the success of your first index fund, you decide to create an emerging market fund, concentrating on the world’s up-and-coming economies. Again, no problem. We have the internet, after all, and we can just print off a list of all the stocks in China, India, Chile, Hungary, and so on, pull out a pile of Benjamins, and go to town.

That won’t work, says Raman Subramanian, Executive Director of Index Research at MSCI. Continue reading

Sector Watch: Spotlight on BioTech

The challenge for many investors who are trying to diversify their portfolios is finding sectors or asset classes that don’t move in tandem together. One sector that has moved up—even as many equity indexes have fallen—is biotech.

Performance: Behind the Numbers

Over the past three months, even as the S&P 500 and other broad market indexes have generally suffered  (the S&P 500 is down 0.62% to date) biotech stocks have generated impressive returns. The iShares Nasdaq Biotechnology Index Fund (IBB) is up almost 12.7% over this period, and the Folio Investing Biotechnology Folio is up 22% over this same 3-month period. For the trailing 12-months, the Biotechnology Folio is up 40% and IBB is up 23.8% compared to the S&P 500 which is up only 5.2%. Continue reading

Why Bond Yields Scare Me More Than Friday the 13th

Stock investors generally don’t have much to fear on Friday the 13th. Historically, Friday the 13th is a relatively calm day for stocks. Jason Zweig, who writes The Wall Street Journal’s Intelligent Investor column, says it’s usually a good day for investors and says superstition about trading on this supposedly unlucky day is one of the market’s “dumbest myths.”

Bond yields, however, are seriously worrying to Geoff Considine.  Here’s why. Continue reading

9 Essential Investing Suggestions

Guest post by Contributing Editor, Lowell Herr, ITA Wealth Management. Lowell is a subscriber to the Portfolioist and his investment philosophy is similar to ours.  Enjoy.

Repetition is the mother of all learning. Whether you are a new ITA Wealth Management reader or a long-term follower, there are investing basic that just don’t change, and here are a few.

Suggestions for the Astute Investor:

1.  Follow “The Golden Rule of Investing.” Save as much as you can as early as you can.

2. Develop a Portfolio Policy. This is sometimes called a Strategic Asset Allocation Plan. In simple words this means one will first determine what asset classes to include in the portfolio. We recommend five to seven basic asset classes to include the following:

Continue reading

The Collapse of the American Net Worth

Many of you are painfully aware of how many friends or family members are out of work, now under-employed, or who have lost their homes. Geoff Considine, a leading contributor to the Portfolioist, provides his take on what we’re calling the “collapse” in household net worth, starting with a recently published report released from the Federal Reserve called the “Survey of Consumer Finances” (SCF).

This study, performed every three years, provides an analysis of household income and wealth across America, and the results will astound you. The SCF is well-worth reading if you want to get a handle on the state of Americans’ finances—especially if you want to see how those same finances have changed dramatically in just three short years. Continue reading