The Primacy of Planning

By |2019-06-14T05:57:20-05:00June 14th, 2019|Global Market Update|

Psst. Got any hot stock tips? Photo: Viktor Hanacek. Source: Picjumbo. CC0 Lots of people want advice about what stocks to buy or what the market will do. But what they really need is guidance on how to plan out their finances. Classically, finance has three major reports: income, assets, and cash flow. Each of these areas has inflows and outflows—positive and negative entries. An income statement covers income and expenses; a balance sheet shows assets and liabilities; with cash flow there are inflows [...]

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Investing for the Future

By |2019-06-12T05:57:01-05:00June 12th, 2019|Global Market Update|

What is an investment factor? Photo: PublicCo. Source: Pixabay. CC0 Investment factors are a way to understand why stocks or bonds perform the way they do. Investments can be classified by the kinds of risks they take. Bond returns are driven by duration, credit, prepayments, the yield curve, and – for global portfolios – currency risk. Stock returns are affected by company size, industry, quality, and country. Real estate is impacted by location and the type of property. And everything is exposed to the [...]

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Sleeping Beauties

By |2019-05-31T06:16:44-05:00May 31st, 2019|Global Market Update|

Are we getting enough sleep? Source: Fancycrave. CC0 Sleep is an increasingly important part of a healthy lifestyle. When we sleep, our bodies repair themselves and our minds reboot. Our circulatory system uses sleep to rebuild damaged blood vessels, especially in and around the heart. We use extended periods of low blood pressure and a lower heart rate to clear out fat and patch up weak vessel walls. Folks with chronic sleep problems can be 50% more likely to develop cardiovascular issues, like high [...]

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Four Cheese Pizza

By |2019-05-29T17:50:56-05:00May 29th, 2019|Global Market Update|

Sometimes simple things taste the best. Photo: Viktor Hanacek. Source: Picjumbo Cheese, bread, tomato sauce, spices, and a little basil can make an outstanding pizza. Bake it just right, and it forms the base of a delicious meal. We don’t need a lot of fancy ingredients whose names we can’t pronounce from countries we’ve never heard of. Nor do we need to grow the wheat in our own back yard or use cheese from our own cows, although fresh basil is nice. What’s important [...]

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Raking Up

By |2018-11-08T07:00:42-05:00November 8th, 2018|Global Market Update|

Have we gotten ready for winter, yet? Photo: Wendy. Source: Flikr. CC-BY-2.0 One of my least favorite jobs every year is raking leaves. It’s cold, lonely work. If I use gloves, I have a hard time picking debris out of the tines of the rake when they get stuck – which they always do around the garden and shrubbery beds, getting caught with the old plants and weeds. I used to be annoyed at my swollen hands, afterward. Now I wonder if the raking [...]

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Frost Warning

By |2018-11-01T07:18:21-05:00November 1st, 2018|Global Market Update|

Are we ready for winter? Photo: Jim Mauchly. Source: Mountain Graphics. Used by permission. The other day my wife and I were out walking early in the morning. We had to bundle up! There was frost in the lower areas and a hint of ice and snow. It made me think of all the little things we do in New England to prepare for winter: find scrapers and brushes for the car, make sure our snow shovels are accessible, stack cords (and cords) of [...]

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Market Dreams

By |2018-07-02T07:50:24-05:00July 2nd, 2018|Global Market Update|

Are market changes real, or are they more like dreams? Dreams of World War 1 soldiers, by Jan Styka. Source: Lublin Museum There’s a common thought that market gains or losses aren’t real gains or losses – they’re only “on paper” until investors sell their holdings, making them “real.” But that’s a cognitive error – a kind of egocentric bias that says that something is only real if it affects me. In fact, price changes are real changes. When IBM went from $100 to [...]

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Allocations Aweigh

By |2017-09-27T07:10:24-05:00September 27th, 2017|Global Market Update|

What’s the right asset allocation? Public Domain. Source: Wikipedia In simple terms, asset allocation is the process of deciding where to invest your money. Not who to have manage it – like Vanguard or an advisor – but what to have your money invested in: stocks, bonds, real estate, bank deposits, commodities. Your asset depends on a couple of basic questions: what do you need the money for, when will you need it, what other resources you have, and other specific issues, like your [...]

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Bonded Returns

By |2017-07-17T12:21:27-05:00March 30th, 2017|Global Market Update|

What good are bonds? Source: Credit Suisse Since the beginning of the 20th century, stocks have returned almost 10% per year while bonds have returned about half that. Because of compounding, though, a dollar invested in equities from 1900 forward would now be worth more than 140 times what a dollar invested in bonds would. And this is only reasonable. The best you can do when you buy a typical bond is get your money back, with a little bit of interest. But some [...]

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The Hidden Asset

By |2017-07-17T12:21:30-05:00February 1st, 2017|Global Market Update|

What’s the asset that no one talks about? Photo: Bryan Hanson. Source: Morguefile When I discuss asset allocation, I usually focus on stocks and bonds. Bonds are a senior claim on a business’s cash flow, and stocks are a residual claim on cash flow. So stocks benefit from a business’s growth, but they’re riskier – they get wiped out if the business fails. Bonds are safer, but they don’t go anywhere. If everything goes right, you just get back what you put in, with [...]

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