Investing

Catalysts

The market continues to defy expert expectations. The economy is in dire straits and will likely get worse before it gets better seems to be the view. While the stock market is not the economy, it tends to reflect the economy in many ways, especially growth and growth expectations. With today’s astonishing GDP print, nobody …

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Investing

The Convexity of a Crash

Convexity can be a confusing topic and I’m by no means a fixed income, let alone a convexity expert. In a nutshell, convexity is a property that results in an investment (i.e., a US government bond) having higher returns during favorable conditions (i.e., declining interest rates) than it has losses during unfavorable conditions (i.e., rising …

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Investing

Rethinking Bond Allocations

In my last post, I discussed the relative unattractiveness of bonds over the medium to long-term. Specifically, I questioned the ongoing diversification benefits of bonds given current interest rate levels. One counterpoint I failed to acknowledge was convexity. Convexity is a more advanced bond concept having to do with how bond prices react to changes …

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Investing

The 60/40 Dogma

We discussed the danger of dogmatic investing last week. One of the investing dogmas of the past 30 years or so is the 60/40 portfolio as the go to portfolio for the masses. The portfolio is constructed of 60% stocks and 40% bonds and is designed to grow, via stocks, during an up-market and to …

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Investing

Doing What Works

Dogma is defined as a principle or set of principles laid down by an authority as incontrovertibly true. Incontrovertible is a strong adjective, reflecting rigidity and lack of flexibility. Absolute truths such as the sun rises in the east and sets in the west or that water is made up of two hydrogen atoms and one …

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Investing

A Tug-of-War for the Ages

We’ve had quite the roller coaster ride so far in 2020. Between the February/March drop in the market to the subsequent bounce to today’s big sell-off, a monumental struggle is underway as investors try to make sense of the present and, more importantly, the future. What’s been made abundantly clear, yet again, is that nobody …

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Investing

Place Your Bets

It’s funny how life happens. We go through these long periods of stagnation and monotony and then we have these shorter periods of abrupt  change. Think of the months and years leading up to the fourth quarter of 2018. Everything was pretty much moving up and to the right. Sure, there were bears at the …

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Investing

Is it time to buy?

I’ve been getting this question a lot over the past two weeks. As you might imagine, it’s not an easy question to answer. Many of us have become accustomed to expect stocks to bounce back quickly after sharp declines. Buying the dip over the past 10 years has worked out quite well. However, historically a …

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Investing

Is it time to panic?

The potential pandemic known as Coronavirus or Covid-19 has taken the world by storm. The headlines and the shelves in your local Costco, Walmart or store of choice would lead you to believe we are approaching or are already in the midst of a major world crisis. I’m not suggesting we aren’t but I am …

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