Independent Wealth Management
Who scrutinizes your investments and portfolio managers, designs and tests your retirement and education plan, searches for new investment ideas, patrols insurance agents and mortgage brokers, shows you how to reduce your investment costs and income taxes, monitors your 401(k), promptly responds to your email, provides one monthly statement, day-to-day net performance across all of your accounts and does all of your paperwork so you can retire and enjoy that trip to Italy? We do! (Please contact us for a no cost, confidential consultation.)
Entries in Investments (15)
Bear Market Advice
Are you are running out of patience with this market? For every piece of good news it seems there’s a corresponding bad news item. For every company exceeding earnings expectations, there seems to be one guiding future earnings lower. In this generally negative setting the market seems incapable of grabbing a foothold and frustration has become the rule.
But that’s often what markets do – frustrate people. Even legendary investor Warren Buffett of Berkshire Hathaway, affectionately called the “Oracle of Omaha” by his followers, experiences occasional frustration with the markets. But his frustrations are different than those of most people’s. He is frustrated when the markets are high. Why? Because as a value investor he can’t find any bargains to buy. Our point is that frustration with the markets affects us all. Some sell into that frustration. Others, like Warren Buffett, are waiting to buy that frustration at bargain prices. Which side do you think you want to be on?
Rafael Velez
Thinking Out of the Style Box
As portfolio construction has become increasingly complex, many investors (and advisors) have turned to a simple and convenient tool to bring structure and discipline to their portfolios — the style box. Style boxes have become so widely used that the familiar grid has become the standard representation of asset allocation and diversification. While it’s hard to question the utility of boxes, there is growing evidence that the interests of investors might not be best served by rigid adherence to the common application; style-box investing.
The Long and Winding Road
Enduring financial principles, like music, can last generations. Benjamin Franklin gave us many examples such as, “a penny saved is a penny earned” and “early to bed, early to rise makes a man healthy, wealthy and wise.” Thomas Jefferson would tell us, “never spend your money before you have it,” and Miguel de Cervantes would warn that, “all that glitters is not gold.”
I have also learned firsthand that “The Beatles” are still selling millions of albums every year. Interestingly, my ten-year old daughter is obsessed with the group. She has...
Sustainable Competitive Advantage
Companies can be evaluated on several aspects of their business including the firm’s competitive advantage over current or potential future competitors. The four main factors utilized to define a company’s competitive advantage or “Economic Moat” are:
High Customer Switching Costs are the one-time expense or inconvenience a customer would incur to switch from one product to another. The more customers are “locked in”, the more likely a company can pass along added costs to them without the risk of loser the relationship. Consider the effort...
6 Traits of Successful Investors
What distinguishes the best performing investment managers from the rest? It begins with a strict adherence to deeply held principles and an unwillingness to stray in the midst of all the daily investment noise. We have been able to identify six traits that are common among these managers. Interestingly, these characteristics have proven...
5 Tips for the Credit Crisis
Between 2002 and 2007, implied risk faded as central banks flooded the markets with cheap money; allowing capital flows to mask losses while boosting asset values to record levels. Billions of dollars of central bank credit translated into trillions of dollars of leveraged bets elevating all asset classes—real estate, stocks, commodities, and bonds. (Excessive lending against over-optimistic asset valuations is a time-honored recipe for asset price bubbles.) But global market risks, temporarily hidden by cheap credit, have now reasserted themselves with a vengeance.
The Original Dow
“The market was down 50 points today.” When you hear this, people are generally not talking about the broad market, but instead about the Dow Jones Industrial Average (DJIA). Since its creation over 111 years ago, the Dow Jones industrial average has become a widely followed barometer of the stock market, despite its obvious shortcomings such as tracking only 30 stocks.
The industrial average has contained 30 stocks since 1928, when it was expandeded to represent the major industries of the U.S. stock market. But when the Dow Jones industrial average began on May 26, 1896, it contained just 12 stocks. Due to radical changes in the economy since 1896...
25 Reasons to own BRK
Much has been written about Warren Buffett...yet very little has been made public about Berkshire Hathaway, the publicly-traded investment vehicle which is the center of his financial empire. Over the past two decades, Berkshire Hathaway has consistently outperformed the S&P 500 Index by approximately three-to-one. Not only has the company never posted a negative return, it has achieved double-digit performance in all but four years since 1965!
Is their a secret behind Berkshire’s unusual success? How is it possible that a relatively obscure company can consistently outperform the top mutual funds by a wide margin? Here are 25 reasons to own Berkshire Hathaway.
Hint: Build a Solid Core
Constructing portfolios around a core/satellite model is not as new a concept as you might think; large institutional investors have been doing it for years. At the core, you have the diversification, tax-efficiency and low costs of exchange-traded funds. And to potentially boost your returns, a handpicked selection of mutual funds, individual securities and/or separately managed accounts. The “core” index component seeks benchmark performance (a useful strategy to minimize the risk of lagging the market) while actively managed “satellites” seek outperformance.
The Importance of Dividends
Did you know that from 1965 through 1981, the DOW fell by 10%? That’s 16 years – half a working lifetime or an entire retirement for many of us. Remember the lessons of history. Stocks can and do go down for long periods of time. That is why you must include a fixed-income as a counterbalance. It is also why you want to own dividend-paying stocks in your portfolio and want to concentrate on companies that tend to increase dividends year after year.
