Investments

Currency movements changed direction this summer and the dollar strengthened for a season.

Investors pulled $83.31 billion out of stock funds during the summer months. Stocks drop when there are more sellers than buyers. And when there are outflows like this stocks drop precipitously.

This summer many things that should do better over a long-term investment strategy did not. This situation is not unusual for one quarter’s worth of time. Such a result only makes reversion to the mean much more likely in the coming quarters.

Q: I am receiving some extra cash as a result of maturing CDs. I want to make a safe investment that is protected against future inflation. We do not need this money, and so I am interested to know what you think of purchasing I bonds for our grandchildren. I have heard they can be tax free if used for college.

David John Marotta was featured on radio 1070 WINA’s Rob Schilling show on September 13, 2011. The topic was the CNBC million-dollar portfolio challenge, and how it does not emulate a good real-life investing strategy.

CNBC’s million-dollar portfolio challenge begins next week. Participants can trade a fictional account of stocks and currency. Prizes are given over each of the 10 weeks, and then a grand prize winner is awarded a million.

“Structured products’ risk-reward ratio is worse than you think.”

Marotta’s Roth segregation technique of conversion and recharacterization was featured in InvestmentNews magazine.

Libertarians and economists both recognize that countries with more economic freedom experience higher gross domestic product (GDP) growth. That growth translates into higher stock returns for investors savvy enough to look for governmental fiscal restraint rather than government stimulus.

Won’t this hedge the markets and protect me in case the markets go down?

Is it worth it to file all the paperwork just to collect a few buck?

High Net Worth individuals are often solicited to provide funds for a private venture such as opening a new restaurant business. Think thrice before considering investing.

How can there be more sellers than buyers? Who are those “extra” sellers selling to?

When choosing between two bond funds with similar returns to team with a stock fund, choose the bond fund with lower correlation with the stock fund you’re selecting

Not every investment consultant has your interests as the top priority, or even the necessary credentials. Here’s how to find the right type of adviser.

I recently read two articles that provided insight on how investors should respond to a market downturn.

A study by Morningstar cited in the Journal of Indexes shows that investors under-perform the very funds they are invested in by 1.5%. Learn how that is possible and avoid that mistake.

“One of the jobs of a financial adviser is to keep people from doing things that feel like the emotionally right thing to do but statistically are the wrong thing to do.”

On the same day that the S&P 500 plunged 6.7% in reaction to the Standard & Poor’s downgrade of US sovereign debt, Bloomberg is reporting on two different headlines stating that Warren Buffet’s company, Berkshire Hathaway, is on a buying spree.

On volatile days like yesterday, I always recommend looking at longer term movements.

I was asked to speak at the Leadership Development Center at the University of Virginia’s EAN Annual Conference on Thursday, August 4th 2001. I’ve collected links to all the resources I mentioned in that talk here in one place.

In a recent Vanguard commentary entitled, “Despite gloomy news, some trends back economic improvement”, Mr. Aliaga-Diaz writes that there are many factors pointing to a long term economic recovery.

Despite assurances to the contrary, a segment of hedge funds still has up to $100 billion locked up and won’t allow redemptions.

International bonds now make up more than 35% of the world’s investable assets, and yet many domestic investors have little or no exposure to these securities.

In 2010 I published a column entitled “Now’s Still the Time to Buy a House.” Investing is like chess in slow motion. It is important to review your moves to see how they turned out. Sometimes they don’t turn out well. Our prediction about real estate, however, was brilliant.

Setting a target asset allocation is the most critical part of investment management.

All developed countries are not equally attractive places to invest. The United States has entered the ring of fire and expected to underperform in future years as a result.

One method to divide the U.S. stock market is by sector of the economy. Overemphasize those sectors left free to innovate and compete on the global market.

When the markets are volatile, the bonus on account of rebalancing is greater.

Wall Street loves speculators because they often get out of a stock just as quickly as they got in. And every time a trade is made, a coin in a Wall Street coffer rings.

For the first time in the Heritage Foundation’s Index of Economic Freedom, the United States was moved from the list of “free” countries to the second tier of “mostly free” countries.

Thousands of investment advisors recommended stop loss orders to their clients. Now it looks like this advice may have been the cause of the May 6, 2010 market plummet.

When the saying first circulated, May was flat. Since 1987, however, May has done phenomenally well, averaging 2.11%.

Your investments should be working for you, appreciating more than inflation to become an engine of growth that pays you money and provides some measure of financial freedom.

Good things do come from France. Frenchman Antoine Deneriaz captured Olympic gold in the men’s downhill skiing event beating out favorites Austria’s Michael Walchhofer and America’s Bode Miller. His win meant flying madly off jumps and being determined to finish first or break every bone in his body. Your investments shouldn’t be like that.

In both good times and bad times, investing is really about managing your emotions. If you want to be an investor, you have to grow to understand not only the relationship between risk and return, but also your own reaction to it.

Those who moved their investments to the supposed safety of Treasury bond investments were deeply disappointed.

David Marotta discusses 2010 in review and the outlook for 2011.

David Marotta discusses what makes certain investments look attractive.

Volatility, therefore, is a matter of perspective. Like the crack of a whip.

There are significant advantages to using different investment vehicles in different types of accounts.

Investing in some mutual funds is like buying a $3 candy bar and paying $5 shipping and handling. All mutual funds are not created equal, and you can boost your returns by doing a little homework before writing a check.

To safeguard your money, you must be able to extricate yourself from any bad investment quickly. Of course, the companies that sell mistakes don’t want you to be able to do that, so they use financial hooks to hold your money captive.

There is always a day of reckoning when people use debt to leverage their investments.

Systemic problems in your portfolio will continue even after the markets rebound.

Investors are fickle. Investing should not be. When your investments go down, even slightly, you may be tempted to make poor choices.

The markets are inherently volatile. Remain humble. Diversify. Avoid fear.

If you think hiding money under your mattress is a risk-free way of building wealth, think again.

Marvel only gets 31% of its revenue from publishing comic books.

Sand can be used to further diversify your portfolio.