2011’s Top Ten (Part 8)

By |2014-09-11T14:29:36+00:00January 14th, 2011|Global Market Update|

We’re looking at my top ten financial planning resolutions. Number 8 is to be sure to think about taxes, but not to think too much about taxes. One of the mistakes beginning investors make is to forget about taxes. They buy and sell indiscriminately, forgetting the effect that short term gains have on their tax bill. Or they fail to take losses when an investment goes down—losses that can help shelter gains when other investments go up. When their taxes are due, they don’t [...]

2011’s Top Ten (Part 9)

By |2014-09-11T14:25:49+00:00January 13th, 2011|Global Market Update|

Among my Top Ten list of financial planning to-do’s for the New Year, number nine is to diversify. I’ve mentioned before how diversification at the heart of true investment management. It separates the investors from the hobbyists It makes it possible to add a volatile stock to your portfolio without significantly increasing the portfolio’s risk. How does it do this? By having the different stocks and bonds in your portfolio go up and down in opposite ways, some risky jags cancel out the jigs [...]

The Top Ten (Part 10)

By |2014-09-11T14:29:14+00:00January 12th, 2011|Global Market Update|

It’s a new year, and with that comes the inevitable resolutions. For 2011, I thought I would list my ten favorite resolutions for investors, from the bottom up. Number ten is to check your ego at the door. The market doesn’t care about your ego. It doesn’t care who invented the internet. It doesn’t care whether your tie matches your shoes or not. The market is all about finding prices that balance buyers and sellers, and weighing the prospects for future returns. It has [...]

Chapter Nonsense (Part 2)

By |2014-09-11T14:28:45+00:00January 10th, 2011|Global Market Update|

If anyone was looking for an example of how municipal bankruptcy works—or doesn’t--they need look no further than Vallejo, California. Back in May 2008 the city of 120,000 failed to win pay cuts from the city workers’ unions. They subsequently filed for protection from creditors under Chapter 9 of the U.S. bankruptcy code. Since then they have spent $9.5 million in legal fees to receive $6 million in concessions from the administrative and police unions. In the interim, control of city operations was given [...]

Small is Beautiful

By |2014-09-11T14:28:18+00:00January 8th, 2011|Global Market Update|

Is it a small world after all? Small stocks have been on a tear. While the S&P 500 was up 15% last year, the Small Cap index was up 20%. Small tech companies were up 37%, while large tech companies were up only 11%. It’s the same overseas: small European companies were up 17%, while large Euro companies were up 6%. Why? Part of the reason has to do with finance. Small companies depend more on loans than large companies. When the banks had [...]

Chapter Nonsense

By |2017-07-17T12:35:17+00:00January 7th, 2011|Global Market Update|

There’s a notion that bankruptcy can cure what ails municipal finance. Like pension obligations. But Chapter 9 is rare for a reason. There’s a bunch of inexpert testimony out there regarding Chapter 9 bankruptcy. Chapter 9 is the portion of the Federal Bankruptcy Code that applies to municipalities. A host of bloggers, busybodies, and bigmouths are suggesting that municipalities will strategically file for bankruptcy in order to get the courts to do what they don’t have the political will to do: reduce their pension [...]

All That Glitters (Redux)

By |2014-09-11T14:27:00+00:00January 5th, 2011|Global Market Update|

The returns are in. And gold is the winner. Only, I don’t understand the contest. Of the five best performing mutual funds for 2010, three of them were gold funds. Three mutual funds with almost $8 billion in assets grew about 50% last year. They capitalized on gold’s 30% rise and added gold mining shares from around the world. For this they charged around 1.5%, and they have early withdrawal penalties. To their credit, two of the funds have been around a while. Both [...]

Why Now?

By |2014-09-11T14:26:33+00:00January 4th, 2011|Global Market Update|

If Munis aren’t about to melt down, what’s all the fuss about? What’s special about right now? To answer this, we have to go back. This market has been in disarray since the sub-prime crisis hit. It used to be an insured market. An assortment of AAA bond insurers assured investors that their principal would be safe, and the three major credit rating agencies could speak credibly on the risk of the underlying borrower. But the bond insurers got greedy and underwrote a bunch [...]