April 23, 2017

Investments

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

What Good Are Morningstar Stars?

What Good Are Morningstar Stars?

Do mutual funds with 5-star Morningstar ratings have better future returns?

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Are Democrats Or Republicans Better For The Stock Market?

Are Democrats Or Republicans Better For The Stock Market?

Politics matters less to our financial success than the ordinary decisions we face every day.

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Marotta’s 2017 Gone-Fishing Portfolios

Marotta’s 2017 Gone-Fishing Portfolios

A gone fishing portfolio is a portfolio of just a few stocks which should weather the ups and downs of the market fairly well while only rebalancing twice a year. Here are three hand-crafted gone-fishing portfolios for 2017.

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Marotta’s 2017 Gone-Fishing Portfolio Calculator

Marotta's 2017 Gone-Fishing Portfolio Calculator

A gone-fishing portfolio has a limited number of investments with a balanced asset allocation. This year I limited myself to 13 investment vehicles with two changes from 2016′s calculator.

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Marotta’s 2017 Vanguard Gone-Fishing Portfolio Calculator

Marotta's 2017 Vanguard Mutual Fund Gone-Fishing Portfolio Calculator

A gone-fishing portfolio has a limited number of investments with a balanced asset allocation. This portfolio uses all Vanguard mutual funds.

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Marotta’s 2017 Schwab Gone-Fishing Portfolio Calculator

Marotta's 2017 Schwab No-Transaction Fee Gone-Fishing Portfolio Calculator

A gone-fishing portfolio has a limited number of investments with a balanced asset allocation. This portfolio uses all Schwab no-transaction fee exchange traded funds.

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US Large-Cap Exchange-Traded Fund Choices

US Large-Cap Exchange-Traded Fund Choices

In anticipation of adjusting our yearly gone-fishing portfolios, I reviewed the performance of five US large-cap Exchange-Traded Funds (ETFs).

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Bond Investing In 2016

Bond Investing In 2016

Bonds had positive returns for the year despite returns peaking at the end of July and falling for the rest of the year.

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Resource Stock Investing in 2016

Resource Stock Investing in 2016

In 2016, Energy and Materials had some of the best returns of the year.

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To What Benchmark Should I Compare My 2016 Returns?

To What Benchmark Should I Compare My 2016 Returns?

Investors always want to compare the return of their portfolio against some benchmark index. We suggest not using the S&P 500 for that purpose.

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Freedom Investing and Emerging Markets in 2016

Freedom Investing and Emerging Markets in 2016

In 2016, the average return of the best investment products of the Freedom Six outperformed the Vanguard FTSE Developed Markets ETF by 6.75%.

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US Stock Investing in 2016

US Stock Investing in 2016

The S&P 500 had another good year, ending up 11.96%. The S&P 500, however, only represents half of the US Stock asset class, and Small- and Mid-Cap stocks performed even better.

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Mailbag: What Do You Think About The Elliott Wave Principle?

Mailbag: What Do You Think About The Elliott Wave Principle?

It is difficult in investing theory to determine which narratives have the appropriate underlying evidence to support them and which narratives are not worth following. Often it is necessary to be both a mathematician and a skeptic to filter out what is even worth considering.

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Benjamin Graham on Individual Stock Analysis

Benjamin Graham on Individual Stock Analysis

“I am no longer an advocate of elaborate techniques of security analysis in order to find superior value opportunities.”

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Using Factor Investing To Boost Country Specific Returns

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The rough idea is that the stock price of companies that are profitable are more likely to appreciate than companies which are not profitable.

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Investing Mistake: Confusing A Promising Company With A Good Investment

blueberries_t

A good narrative describes what happened in the past. And even though past earnings may have something to do with current share prices, they don’t have anything to do with future share prices.

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Factor Investing: Small and Value Factors

colored flowers

Factor investing “tweaks the idea of asset allocation and diversification by seeking out types of securities that have been shown, by decades of academic research, to offer positive return premiums over time.”

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Healthcare Stocks And Asking “Relative To What?”

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Why do our portfolios systematically overweight healthcare stocks?

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How The Markets Moved After A Trump Victory

bluegreenfractal

Beware of reading too much into three days of market movements.

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Mailbag: Which Investment Fund Should I Purchase To Minimize Fees?

stethoscope

On the surface it seems like option 3 (VHT) is the best deal. Is there anything I am missing?

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The Case for Investing in Energy Companies

oilrig

Energy’s low correlation with nearly every other major asset class means even very conservative investors should consider over-weighting Energy stocks.

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Investing In Hong Kong Has Lowered Risk and Boosted Returns

hong kong skyline

We allocate a portion of our managed portfolios to foreign stocks, and Hong Kong is the highest ranked country on the latest edition of the Index of Economic Freedom.

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Hedge Funds and Long/Short Strategies

Ostrich Race

Long/short strategies use the money from the stocks they have shorted to purchase extra stocks that they hope will go up.

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Are You Paying for Your Fund’s Advertising?

sparrow feeding

If you own some mutual funds, chances are you are paying a hefty marketing price.

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Why the Ending Value on your Performance Report Differs from your Statement

DogTeam

Here’s what you need to know to understand why the numbers may not match.

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Don’t Forget to Rebalance All Your Assets

stacked rocks

It can be easy to forget about your company’s 401(k) because you aren’t depositing the money yourself, your pre-tax contributions are deducted from your paycheck and are electronically deposited by your employer.

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What’s the Difference Between Time Weighted Return and Internal Rate of Return?

Abacus

There are 2 main types of returns you want to see on your performance report. What’s the difference?

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Economic Indicators: Gross Domestic Product (GDP)

basket of food

Under one theory, changes in GDP or the rate of GDP growth precede and could cause stock markets to react and move in response. This is usually not the case.

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What NOT to Compare on Performance Reports

Odd Couple Dogs

By definition and design, different types of reports produce different numbers.

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Beware of Dire Market Crash Predictions

questioning chick

I receive dire predictions with such frequency that were I to act on even a fraction of them I would never be invested in the markets.

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Where Should I Invest Money Which I Will Need in a Year or Two?

house money

Return comes with an element of risk. There is no safe investment which also pays a good rate of return.

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Why Would You Intentionally Realize Capital Gains?

handful of cherries

When you sell an investment that has appreciated, the IRS looks at your tax rate and taxes the gains accordingly.

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Selecting an Endowment’s Asset Allocation

Selecting an Endowment's Asset Allocation

Two rules of endowment investing: 1) Keep an equity bias and 2) diversify.

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The Golden Bear: The Bear Market of 1973

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This Bear market is considered one of the greatest challenges to retirement planning.

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Recouping Losses Is Not As Hard As You Think

Deceptive Posts About The Difficulty Of Recouping Losses

Many advisors and most investors don’t really understand the math on how to compute investment returns.

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Radio: The Importance of Real Estate

rainbow row

David John Marotta was interviewed on radio’s Schilling Show discussing real estate and its importance in your total net worth.

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Changing Your Financial Behavior Is Difficult

Financial Behavior Modification Is A Difficult Process

Our minds are wired to quickly generalize on perceived trends and react to them.

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Double Bottom Bear: The Bear Market of 1970

Double Bottom Bear: The Bear Market of 1970

Bear Markets are unpredictable, but there is no reason that they should be a cause of distress.

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5 Reasons to Have Some Cash Equivalents

5 Reasons to Have Some Cash Equivalents

There are at least five reasons to hold cash. Without a good reason to hold cash, you may be holding too much.

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BREXIT: Britain’s Independence Day

BREXIT: Britain's Independence Day

The future may be uncertain, but the markets are quite reliable in the long run.

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Narrowly Framed Questions Fail to Meet Life Goals

Narrowly Framed Questions Fail to Meet Life Goals

Purchasing investment products in isolation from the larger context of your specific situation is like pushing random buttons on a vending machine in order to provide a Thanksgiving dinner for your family.

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Bloomberg Article Gets Asset Allocation Exactly Wrong

Bloomberg Article Gets Asset Allocation Exactly Wrong

Investors should not have to deal with financial reporters that misunderstand the field they write about.

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A Guide to Investing in REITs

A Guide to Investing in REITs

REITs are one way to get some of the benefit of investing in real estate without as much of the risk.

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Slow and Steady Wins the Race

Slow and Steady Wins the Race

You can learn a lot about financial management from snapping turtles.

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What Are The Problems With Illiquid Alternative Investments?

What Are The Problems With Illiquid Alternative Investments?

If you happen to hold alternative investments and can find a fair price for them, we recommend that you liquidate them.

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What Is Settlement Date And Why Does It Matter?

What Is Settlement Date And Why Does It Matter?

Most investors think that whenever you buy or sell a security the money is immediately deducted or deposited into your account. This is not true.

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Guidelines for Using Margin

Guidelines for Using Margin

Too much leverage is risky because it endangers meeting your goals.

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Fund Analyzer Shows Value Of Lower Fees

Fund Analyzer Shows Value Of Lower Fees

Continually curating a list of low cost funds is valuable for long term investors.

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What is Margin?

What is Margin?

We don’t normally recommend being on margin, but we recommend having the option in case it is needed.

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Investing Strategies for an Irrational Brain

Investing Strategies for an Irrational Brain

Recency bias is perhaps the most difficult natural bias to overcome.

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