Sectors and Asset Classes

I expect we have seen the bottom of both the housing market and 30-year fixed interest rates.

“A well-designed financial plan can get derailed by the wrong investment. Here are seven things investors can probably do without.”

Monthly commentary on the countries ranked high in economic freedom.

Some of the monthly commentary on the returns of Northern Europe compared with the EAFE Index.

“To answer that, it’s good to review key indicators, like the Shiller P/E ratio, and their recent history, experts say”

“The divergent claims about gold can be puzzling. How can a commodity that predominantly is either stored in a vault or gets formed into jewelry have so many stories spun around it?”

Fearful of monetary or societal failure, many hope that owning gold will bring them peace of mind.

On average gold keeps up with inflation, albeit with wild gyrations.

From $255.95 gold rose to $1,795.00 between 4/2/2001 and 11/8/2011.

From $850 gold dropped to $255.95 between 1/21/1980 and 4/2/2001.

Gold advocates cherry pick gold’s returns from trough to peak.

Stocks have an average annualized appreciation over inflation of 6.86%, whereas gold is just 0.33% over inflation.

The optimum asset allocation to physical gold and silver is 0%. Instead, we recommend you use resource stocks as an inflation hedge.

“Why Buffett thinks investing in gold is stupid”

A blended investment style for all markets can lead to high returns with low risk.

If Bogle is against ETFs, why does Vanguard run so many of them?

Mid-cap value should be part of any U.S. stock allocation which wants to remain invested in the markets, but is worried about potential corrections.

To understand this newest dimension to DFA’s investment strategy, you need to begin with an understanding of the three-factor model described by Eugene Fama and Kenneth French.

Follow-up information for 2013 AAII presentation “Dynamic Portfolio Construction in the Context of Comprehensive Wealth Management.”

Here are some large cap stocks with very low 12 month trailing P/E ratios.

Q: I am looking for a way to get into the distressed real estate market. What recommendations do you have about investing IRA or 401(k) funds in rental houses?

With the enormous increase in the taxation of dividends, high net worth investors may be tempted to abandon dividend-paying stocks entirely. This is not necessary.

As you get closer to the hole with each shot (this could be too much of an assumption for those hack like me) you can focus on precision over power.

Four reasons not to abandon a brilliant allocation that includes emerging markets simply because of short term fluctuations.

MarketWatch is seeking a top-notch writer who will bring a fresh perspective on money to the world’s investors. We believe that fresh perspective ought to include the idea of freedom investing.

Sometimes the medium term trend seems to weigh more heavily in our minds than the long or short term trends.

“Anyone who’s bought gas, paid a medical bill or sent a child off to college recently knows that the Consumer Price Index doesn’t tell the whole story of inflation.”

“Real estate investment trusts should be much more than an optional selection in a balanced investment portfolio.”

“A growing link between municipal bond and U.S. stock performance could be very bad if equities fail to rise robustly over the next few years.”

Direct ownership of gold has become more popular, despite some lingering fear that the government could again ban private gold ownership. With ongoing concerns about the global financial system and gold hitting a record high, many people are interested in this “safe haven.”

Sector rotation would suggest that we are still at the beginning of a market recovery. This is probably the bottom of energy stocks.

“Investors may hold fixed income securities to reduce portfolio volatility, generate income, maintain liquidity, pursue higher returns, or meet a future funding obligation.”

Emerging market bonds are an attractive way to get a higher yield, but historically they have come with higher volatility and a high incidence of default. But that has been changing.

I was on the radio today and someone called in claiming that Vanguard Emerging Market ETF (VWO) had done nothing but go down in value.

A large number of people in the United States are worried about our profligate spending and the resulting devaluation of our currency. They are worried about politics and socialism and the economy.

Precious metals will, on average, just keep up with inflation, but your after tax return would mean you fell behind inflation by the 28% tax you must pay.

When growth is relatively cheap it should outperform value.

The Marotta allocation method is a proportionally weighted allocation based on the square of each Sharpe ratio. Squaring the Sharpe ratio drastically reduces asset categories in proportion to their distance from the efficient frontier.

Q: Do you recommend dividend-paying stocks? If not, what investment strategy do you recommend for retirees like me who are seeking income from our portfolios?

Diversifying your portfolio means finding assets that have value on their own merits but do not move exactly alike. Here are the principles on building and rebalancing asset classes and subcategories.

Crafting portfolio asset allocations is a combination of art and engineering. Just as a blending of colors can produce cerulean, so a blending of indexes produces a unique shade of risk and return.

Even if the overall inflation rate is only 2.25% in the next 10 years, an investor who holds a 10-year Treasury until maturity will realize a zero real return after inflation.

A stock’s valuation is measured on a continuum from “value” to “growth” In broad strokes, value stocks are cheap and growth stocks are expensive.

The second factor of investing is size as measured by a stock’s total capitalization. Over time small cap will outperform large cap even after factoring out measurements of volatility.

Most investors do not have a balanced portfolio. And by chasing investment returns they miss the easy money they could make from having a good asset allocation in the first place and rebalancing it periodically.

In the midst of this turmoil, especially after this past summer’s sharp drop, many investors wonder if they should put all of their investments into something safe and avoid the markets altogether.

Although the house does not pay me any money on an ongoing basis, I think it will represent a very good return on my money invested should I decide to sell.

Q: Is it now time to short Treasuries? What do you think about using inverse ETFs to play the inevitable bear market for U.S. bonds?

I’m in my 20s and I’m just getting started in the working world. Which of the attached 401(k) investment choices do you recommend?

What advice do you have for someone who is considering a strategy shift toward fixed income?