But if I knew how to manage my portfolio safer and smarter than most hedge fund managers, I could realistically grow my wealth.
Why now is a good time to give high yield bonds another look
After last week’s sell-off, many investors are worried that another global recession could be on the horizon. Russ provides his take.
The CPI and PCE are both important indicators of U.S. inflation. CPI is more important from an individual perspective, while PCE is more important for monetary policy.
Finally, it’s worth considering incorporating non-traditional, or alternative, strategies into your investing arsenal. With such investments, you can potentially enhance diversification and amplify your portfolio’s growth potential.
U.S. stocks are no longer cheap, and that has stocks outside U.S. borders looking even more reasonable. Specifically, I see opportunities in Japan.
Now that the fourth quarter is here, it’s time to assess your investment portfolio before 2014 draws to a close. Russ provides five investing to-dos to consider.
The U.S. Bureau of Economic Analysis issues PCE data, and the price index is a measure of the average increase in prices for all domestic personal consumption.
For example, at least historically, small cap valuations have been more sensitive to changes in monetary conditions than their large-cap counterparts, and this was evident last week.
While there’s not one substitute for TIPS, there are other asset classes that do a good job of hedging against inflation that investors may want to consider.
Gold certainly can be an inflation hedge, and it has worked in the past. Obviously, one of the reasons gold has been weak of late is that people are becoming less concerned about inflation.
But gold also does two other things, which make it worth having in the portfolio in small amounts. It’s diversifying as it behaves differently than paper assets
Before the technology (XLK) bubble burst of 2000, 62% of investors considered themselves bullish. 53% considered themselves bullish before the U.S. financial crisis (XLF) of 2008.
U.S. Treasury yields have been low this year due to the rise in geopolitical tensions. The slowdown in the Eurozone (or EZU) and Japan (EWJ) caused jitters in the markets.
Most professional advice is focused on strategic asset allocation. It advises exposure to U.S. equities (SPY) and bonds (BND). The allocations are based on the investor’s financial goals and risk appetite.
The investor holding of stocks hasn’t decreased drastically—despite the stock market crashes during the technology bubble burst (XLK) of 2000 and the U.S. financial crisis (XLF) of 2008.
On an average, 46% of the portfolios for non-Millennials were comprised of U.S. equities (SPY) (IVV). 15% of the portfolio was made up of U.S. bonds (BND) and Treasuries (TLT).
The recession after the financial crisis of 2007–2008 made investors wary of investing in U.S. markets. The S&P 500 (SPY) fell almost 57%—from 1,576 in October 2007 to 676 in March 2009.
During the U.S. financial (XLF) crisis, investors lacked confidence. They avoided stocks and increased their weight in cash. As the U.S. economy recovered, cash holdings decreased.
Currently, the S&P 500 is giving year-to-date (or YTD) returns of more than 8%. It posted gains for seven consecutive quarters. The S&P 500 Index (SPY) closed at a new high 34 times in 2014.
One of the interesting aspects of last week’s sell-off was that two of Asia’s largest markets- China and Japan – managed to buck the downward trend and finish higher.
While Russ doesn’t believe that last week’s sell-off reflects a fundamental shift in market conditions, he writes that it does provide two important lessons for investors.