Investing

Sentiment: On the Fence

There are two main competing schools of thought that attempt to explain, or account for, stock price movements. The first is the Efficient Market Hypothesis, which in its simplest form theorizes that share prices reflect all available information that might impact a stock price one way or another. As a result, consistently generating returns greater …

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Investing

The Plan

“I love it when a plan comes together.” – Colonel John Hannibal Smith from the A-Team Over the past few months, we’ve discussed various topics as they relate to investing. While useful and informative in isolation, these items are most powerful when combined together in an investment plan. An investment plan should reflect your objectives, …

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Investing

Valuation Cross Section

This post is going to be a little more technical than what we’ve been doing over the past couple of months. I’m not intentionally trying to make it more technical but this particular analysis is a byproduct of some of the other work I’m engaged in currently and felt it was a good example of …

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Investing

The Art of Investing

While golfing with a buddy last week, he asked me to teach him all about investing. Easy enough, right? I don’t know all about investing. Lesson over. Of course, that’s not what he was looking for or expecting. I ended up sharing many of the concepts I’ve been addressing in this blog over the past …

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Investing

Stocks and Time Horizon

As we mentioned in last week’s post, time horizon is the length of time you plan to hold an investment which usually lines up with some sort of event that will require the use of the funds invested. One of the most common of these so called liquidity events is retirement. The asset classes you invest …

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Investing

Time Horizon

In the case of investing, time horizon is how long you expect to hold your investments. It goes hand in hand with diversification and compounding, which we’ve addressed in recent weeks’ posts. Understanding your time horizon and investing according to your time horizon are critical to your investing success. Events tend to drive the investing …

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Investing

The Role of Valuation

Many financial pundits have expressed concerns over what they deem to be elevated valuation levels for the stock market over the past several years. Relative to history, stock valuations are certainly elevated. Before proceeding, I want to make sure everyone knows what I mean by valuation. First, valuation is not price although the two are …

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Investing

The Power of Compounding

Drawdowns We’ve discussed the importance, as well as the benefits, of diversification in several recent posts. One of the objectives of diversification is to minimize declines in your portfolio’s value (drawdowns) while still offering the potential for attractive returns. Why do we want to minimize drawdowns? The obvious answer is everybody wants to lose as …

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Investing

Measuring Up

Not All Financial Advisers Are Created Equally In the world of wealth management and financial advice there are many options. Some financial advisers are advisers in title only with little to no meaningful relevant training and/or experience, are effectively salespeople of their respective companies’ products and have no legal obligation to act in their clients’ …

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Investing

Going Global

Another Perspective In our previous two posts, we’ve discussed asset class diversification and investment strategy diversification. In today’s post we’re going to discuss the importance of geographic diversification, which is commonly missing from investor portfolios, especially in the U.S. Not surprisingly, most investors have a geographic preference for their home country within their investment portfolios. In …

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