Given the continued sharp stock price declines on Friday, August 21st, and thus far on Monday, August 24th, we’re sending this follow-up memo to discuss the pitfalls of alternatives to our customary advice of maintaining your current stock allocation. Our advice presumes that stocks are a necessary part of your investment portfolio to meet your long-term financial goals. The following …
Aug. 21 Memo to Clients re: Stock Declines
The past few days have seen sharp declines in US stock prices, but as of August 20, the S&P 500 stock index is down all of 1% for the year, and still above its January 30th low by approximately 2%. The current problems for the market range from slow world-wide economic growth; to more specific problems in China, and certain …
Is “Picking Winners” Actually a Loser’s Game?
For decades, Wall Street firms have marketed their ability to beat the market with their active investing strategies. The claim hinged on each firm’s ability to “pick winners,” stocks whose returns would beat the market’s. This market-beating ability would, in turn, justify the firms’ high fees. But in fact, active management rarely provides better investment results than what could be earned simply by …
Why We Don’t Use Active Funds
We’ve never believed that “actively managed” investments can reliably outperform index funds over longer-term timeframes. (NOTE: when we use the term index funds, we mean mutual funds and Exchange Traded Funds (ETFs).) Turns out, the evidence is on our side: over the past decade, the vast majority of actively managed funds – large-cap, mid-cap, and small-cap alike – underperformed their benchmark …
What’s the Most Important Thing to You?
Chances are, money was not the first thing that crossed your mind. Make no mistake: money is extremely important in our lives and our world: it shapes our behavior, often drives our decision-making, and colors the way we think and speak. But money, at core, is just a tool. We don’t earn money for money’s sake. We do it to …