March 5, 2015

Investments

Investments are at the core of what we do, and here is some commentary on various aspects of the financial markets.

Oil Price Predictions Are Essentially Meaningless

Oil Price Predictions Are Essentially Meaningless

“The most important thing I learned from my research was never to attempt to forecast the price of oil.”

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What Happened To The Australian Dollar?

What Happened To The Australian Dollar?

At first glance, AUNZ did not have great returns in 2014. But is that the whole story?

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Mailbag: Confused by Google And Yahoo Finance

Mailbag: Confused by Google And Yahoo Finance

Q&A: “I don’t understand how to explain what happened to the share price. What was going on in the fund?”

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What Is The Alternative To An Annuity?

Question hole

An immediate fixed annuity is not an investment; it is an insurance product.

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Radio: What Did Well in 2014 and What Might Happen in 2015

Old Radio

David John Marotta and radio host Rob Schilling discuss what did well in the market as well as the online security of investments.

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What Is The US Dollar Index?

What Is The US Dollar Index?

How is the change in the value of the dollar computed?

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Returns from the Countries with Economic Freedom

Freedom Countries - 2014 Returns

Freedom investing beat the EAFE Foreign index by 7.92% in 2014.

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2014 Returns for Our 6 Asset Classes

6 Asset Classes - 2014 Returns

When asset classes are not correlated that means they often move in different directions.

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Does Past Performance Have Anything To Do With Future Results?

Does Past Performance Have Anything To Do With Future Results?

Is there a correlation which would justify talking about “the momentum of the markets”?

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One-Fund Investing

Old Globe

Either of these funds would be a good choice for a one-fund investment if you really want to keep it simple, and you could invest in both of them if you want a two-fund strategy.

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Does Market Volatility Cause Post-Traumatic Stress?

Does Market Volatility Cause Post-Traumatic Stress?

The best antidote to the stress of market volatility is to understand that the markets are inherently volatile.

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Guess What Statistic Has The Highest Correlation With The S&P 500?

Guess What Statistic Has The Highest Correlation With The S&P 500?

David Leinweber calls this technique, “torturing the data until it screams.”

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Marotta’s 2015 Gone-Fishing Portfolio

Fog Fishing

A gone-fishing portfolio keeps investing simple.

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Marotta’s 2014 Gone-Fishing Portfolio Review

The fishes

A review of last year’s 2014 gone fishing portfolio returns.

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Marotta’s 2015 Gone-Fishing Portfolio Calculator

The fishes

A gone-fishing portfolio has a limited number of investments with a balanced asset allocation that should do well with dampened volatility.

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November 2014 Returns for Our 6 Asset Classes

November 2014 Returns -6 Asset Classes

Here are the returns for our six Asset Classes from November 2014.

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August – October 2014 Returns for Our 6 Asset Classes

6 Asset Classes - 8-10-14

Here are the returns for our six Asset Classes from August 2014 – October 2014.

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Bogle’s Best Advice: Don’t Peek

Don't Peek

When it comes to finances, just shut your eyes and keep them closed.

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If You Wouldn’t Buy It, Why Keep It?

Lego Shop

The stock market is one of the few places that when things go on sale we are less likely to want to buy.

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Should You Be Building Bond Ladders In This Lower Rate Environment?

Ladder from above

There was an interesting article by Joseph Lisanti in Financial Planning Magazine entitled, “Should You Be Building Bond Ladders?” which read in part: As with many strategies, laddering works best for clients with sufficient assets to benefit fully from it. “It is a tried-and-true strategy,” says Morris Armstrong of Armstrong Financial Strategies, an RIA in [...]

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Advisors Focus On Panic Prevention In Volatile Market

Panic Button

Our brains are not wired well for handling the fluctuations in the stock market. Could a financial advisor help?

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Active vs. Passive: Where Money’s Flowing

Fish flow

Here is the number one criteria you should use in your fund screen.

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How To Diversify Highly Appreciated Stock

Dog and Turtle

Exchange funds, also know as swap funds, can provide investors with one highly appreciated security a way to trade it for an equivalently valued but more diversified portfolio.

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Driving Emotions From Your Investment Process: A 12-Step Program

Brain Scan

Don’t let short term volatility ruin a brilliant long term investment strategy.

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What Asset Allocation Should I Have For My Schwab Donor Advised Fund?

Pie Chart

Keeping your donor advised fund invested could result in more benefit to the charities you support.

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AAII 2014

David John Marotta presenting

The articles associated with David John Marotta’s presentation at the DC Metro chapter of the American Association of Individual Investors.

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Style Box Annualized Returns For The Past Three Years

Morningstar 3-year stylebox returns 2014-08

Morningstar data for the 3-year annualized returns based on style boxes shows us three interesting lessons.

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Real Returns Favor Holding Stocks

Real returns favor holding stocks

There are several important lessons to learn from this graph.

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Mailbag: What Cost Basis Method Do I Want For Vanguard Mutual Funds?

Mutual Funds Scrabble

In our example, your gain/loss could vary from -$1,000 to +$3,500 depending on the method used.

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Mailbag: What Is The One Fund Should I Invest In?

Rainbow Stars

Here’s how to earn a slow million.

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Why a Monkey Throwing Darts Could Boost Your Returns

Mandrills are the world's largest monkey.

Not aiming for where the money is should boost returns.

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The Efficient Frontier Of Investing

Blended Efficient Frontier

Many investors don’t appreciate asset allocation or understand intuitively how a diversified portfolio can exceed the sum of its parts.

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Freedom Investing Since 2000

Freedom Investing 2000-2016-06

Recently we did an analysis of the returns of the MSCI Country Specific Indexes

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The Wealth Of Nations Is Their Freedom

Berry Hard Work

“When institutions protect the liberty of individuals, greater prosperity results for all.” – Adam Smith

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Freedom Investing Beats EAFE Index by 3.92% Annualized Over Past Decade

Freedom Investing 2014-06

Over the past decade the economically free countries have an annualized return of 11.34%. The S&P 500′s annualized return was 7.78%.

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Should I Tender My Allergan Shares To Valeant Pharmaceuticals?

Allergan

Perhaps they should make this into a mini-series.

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Don’t Do Something. Just Stand There!

Sisters Forever

You learn a lot by the discipline of reading old news.

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Mailbag: How Do I Open A Vanguard Trust Account?

Vanguard Personal Investors

I am the trustee for my mother’s living trust and I am trying to help her open an investment account at Vanguard. How do I go about opening a Trust account at Vanguard? – Trustee in Cville Most regular brokerage accounts can be opened online. Trust accounts need to use the paper form and provide [...]

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Mailbag: Can I Roll My IRA Into A REIT Tax-Free?

Can I Roll My IRA Into A REIT Tax-Free?

A reader asks, “My wife has a $250K SEP IRA earning 1.5% interest. Can we use any of the funds for real-estate investments?”

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Does Every Client Get Put Into One Of A Few Investment Allocations?

Buckets

The short answer is, “No.”

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What Benchmark Should I Measure My Return Against?

Bad Benchmarking

Don’t let the noise of random returns ruin a brilliant investment strategy.

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Investment Advisors vs. Brokers

Lock and Gold Coins

Low risk firms should be visited less frequently by the SEC.

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Emerging Markets Still A Good Investment Despite Warning Notices Regarding Russia

SSEMX Warning Notice Regarding Russia

Russia is less than 6% of most emerging market indexes.

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How To Save Wealthy Clients From Themselves

Brain Scan

“Emotion can undo the best-laid financial plans.”

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What Is A “Margin Alert”?

Schwab Margin Alerts

There are five types of Schwab Margin Alerts: Margin Maintenance, Short Position, Trade Debit Due, Margin Debit Balance / Account hold Value Advantage, and Trade Settlement Violation

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What Exactly Is Quantitative Easing?

Piggy Bank

Quantitative easing is a sneaky way to make everyone dealing in U.S. dollars pay off the U.S. debt.

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Gift Tender Offers To Charity To Avoid Capital Gains Tax

Gift with Yellow Bow

This technique can avoid paying any tax, a savings worth up to 36.1%.

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How Does The Fed Control Interest Rates In A Free Market?

Federal Reserve 2014

Even as recently as 2007, banks were paying 4% interest. Now you have to go to the hundredth decimal before you find your interest rate.

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As Recently As 2007, Banks Were Paying 4% Interest

Taxable Money Market Rates 2014

In retirement planning, these are the deep risks we are concerned about.

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Every Bond Contract Has At Least Five Components

Bond Components

Unlike stocks, each bond contract has unique characteristics that define how repayment will occur.

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