Sound Advice

The All-Weather Portfolio   The continuum of possibilities within the world of investments has two axes: reward and risk. In virtually all cases, as the potential for reward increases, so does the exposure to risk. For the great majority of portfolios, the key constituents are stocks and bonds. Each of the major asset classes is subdivided into many smaller segments. Stocks can be divided into domestic and international. Within each of those categories, they can be further divided by the size of the companies they represent. Of those that are international, the countries may be labeled developed or emerging. To make things more confusing, there are companies such as Coca-Cola or 3M that are ostensibly domestic, but in fact derive most of their revenues from outside the U.S.   The converse would be Royal Dutch Petroleum and Nestle, based abroad, but with a considerable presence in North America. One of the most basic rules of thumb is that over extended periods of time, generally

Planning:  Failure is not an option   Why do we put off taking action that is important to our financial health?   In the past, I have explored some of the financial "emergencies" that can be avoided with planning or prevention.   It’s easy to understand why planning is so important.   It's less easy to understand why clients procrastinate on important things that are in their best financial interest. Nine out of 10 people would agree that planning makes sense.   Just knowing that we should plan, however, isn’t going to change most financial behaviors. We already know what needs to be done.   The bigger question is why we put off doing it. The answer to that question is almost always emotional.   Our procrastination often has deep roots in anxiety, fear, and grief. Many of the blocks to planning can be tied to things we experienced earlier in our lives that were never resolved.   For example, I once had a client, a business owner in his 50s, who had committed to c

Don't Expect Another Big Gain   As has often been the case after the market has turned in an unusually broad advance, the gurus of Wall Street continue to build their cases for more of the same.   This most certainly is a replay of a recent film entitled Dumb and Dumber.   Successful investors are best served by planning for the worst while hoping for the best.   That's especially so in the wake of a few years when almost every asset class delivered fine returns.   But a bet on a back-to-back bingo of this sort ignores the writing on the wall, which is anything but encouraging. For starters, stock valuations are stretched.   To be sure, there are seers who find ways to look ahead and opine that when you look far enough ahead today's prices don't seem that high.   The problem with this approach is that Wall Streeters don't use binoculars.   For these folks, the future is a concept that views the next few quarters, not the next few years.   When seen that way, i

Why Investors Need Advisers Who Are Fiduciaries Pity the average investor looking for the answer to the question we all face: "Will I have enough?"   With millions of baby boomers now facing the challenge of retirement and the desire to maintain a hoped-for lifestyle, the search for a competent adviser who will put the interest of the investor first is not one that can be easily undertaken.   Over my decades in the industry, it has become abundantly clear that most individual investors are clueless about how to go about finding a proper adviser.   Although the major brokerage houses and insurance companies will happily sweet talk you with offerings that are best positioned to improve their own bottom lines, the odds of finding the right person are not good.     In the absence of a fiduciary requirement, all that is required of the nonfiduciary financial adviser is that the product or service being offered is suitable.   And, no surprise, the definition of suitability is

Are stocks getting too pricey?   If our only focus is on Wall Street and a stock market that seems to know only one direction, one might think that once again we're in a Goldilocks era.   Not too hot.   Not too cold.   Just right. The hitch is that there's a lot more going on than what takes place during the midday trading hours of each weekday.   As usual, Congress is making a lot of noise and getting little done.   Israel is again jockeying for a change in leadership.   And, countries around the globe continue the struggle to get the pandemic under control. Back in 1849, Alphonse Karr, editor of Le Figaro , said "the more things change, the more they stay the same".   Over time, people tend to repeat long-term behavior patterns, which is why history is an essential part of our educational curricula.   So much of what we are seeing now has already been done in perhaps a different fashion in the past.   The point is that there are developments and there are resu