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Asset Allocation: Why Investors Should Diversify Beyond Stocks
As someone who has spent more than two and a half decades as a research analyst, investment advisor, portfolio manager and financial writer, I’ve often felt the most important question an investor or trader can ask himself is, “What if I’m wrong?”
This is done too seldom, in my experience. And that’s unfortunate. Because when investment lessons are learned the hard way, it can be painful… if not devastating.
For example, when the market was flying high a couple of years ago, many investors became complacent. They blithely assumed that the market might hit a pothole here and there, but overall it…
9Apr2009 | Investment U | 1 comment | ContinuedTraders Toolbox: Money Management – Part 1 of 4
Crucial but often overlooked, money management practices can mean the difference between winning and losing in the markets.
Plenty of books, manuals, and software packages will help you form and opinion of a market, but not many will tell you how to trade once you have decided to get long or short. The goal of money management is to increase the odds of high quality trades. And as we’ll see, leaving the money management variable out of your trading equation can lead to ruin, even if you’re correct about the market direction.
In a broad sense, money management can encompass those elements…
24Nov2008 | INO | 0 comments | ContinuedThe Wall Street Meltdown: What Should Investors Do Now?
First it was Countrywide. Then it was Bear Stearns. Then Freddie and Fannie. Now we learn that Lehman Brothers has filed for Chapter 11.
Bank of America bought the nation’s largest brokerage firm Merrill Lynch, in a rush sale.
One of the nation’s biggest insurers AIG is seeking a $40 billion bridge loan from the Federal Reserve and slumped 50% this morning. (After dropping over 30% on Friday.)
Predictably, the market is taking this news hard. As an investor in the midst of this Wall Street meltdown, what should you do now?
Well, you can panic and sell. (That hasn’t been terribly…
18Sep2008 | Investment U | Comments Off | ContinuedPortfolio Rebalancing: The Easiest, Zero-Risk Way To Make Money In 15 Minutes
There are few things I can guarantee with absolute certainty in investing, but this is one of them:
Given enough time (usually a year) your portfolio will transform itself into something you never intended.
That’s because the markets almost never move in tandem. According to The Wall Street Journal, international stocks last year averaged 14.5% and precious metals turned in a 16.7% performance. Yet large-cap stocks, measured by the Dow, ended the year down a disappointing -0.61%, and the five- to seven-year U.S. Treasuries offered a mere 1.4%.
And this year, the returns in each asset class will show more even more disparity.
This…
26Aug2008 | Investment U | Comments Off | Continued
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