Sound Advice

Why investing in inexpensive market index funds is a great idea Investing in inexpensive market index funds is widely regarded as a smart and effective strategy for most investors.  Here’s why: 1. Broad Diversification Market index funds track a wide variety of companies across different sectors. For example, an S&P 500 index fund gives you exposure to 500 of the largest U.S. companies. This diversification lowers the risk compared to picking individual stocks, as poor performance in one company or sector can be offset by better performance in others. 2. Low Fees = Higher Returns Inexpensive index funds have very low expense ratios (often 0.03%–0.10%), meaning you keep more of your investment gains.  Actively managed funds often charge 1% or more, which can significantly erode returns over time due to compounding costs. 3. Consistent, Market-Matching Performance Index funds don’t try to beat the market—they match it. Since most active fund managers fail to c...

An Important Market Signal is Flashing RED Robert Shiller is a prominent American economist, academic, and author, best known for his work on financial markets, behavioral economics, and housing markets.  He is Sterling Professor of Economics at Yale University.  In 2013, he was awarded (along with Eugene Fama and Lars Peter Hansen) the Nobel Memorial Pri ze in Economic Sciences for empirical analysis of asset prices. Robert Shiller’s CAPE index is a valuation measure for the stock market that compares current stock prices to average inflation-adjusted earnings over the past 10 years.   It’s designed to smooth out short-term earnings fluctuations and better reflect long-term value.     In 1999-2000, the CAPE index soared to over 44, for above its long term average. The Shiller CAPE (Cyclically Adjusted Price-to-Earnings) index is currently at historically elevated levels—recent readings hover between 36.8 and 38.6, compared to a long-term median value of...

Which stocks are driving the market averages and what percentage of the overall market capitalization do they account for?   The  market averages —such as the S&P 500—are being primarily driven by a small group of very large companies. These firms wield enormous influence due to their high market capitalizations, and their performance can significantly impact the entire index. Here are the current top 10 individual stocks by their weight in the S&P 500 index: Rank Company Ticker Index Weight (%) 1 NVIDIA NVDA 7.28 2 Microsoft MSFT 7.12 3 Apple AAPL 5.78 4 Amazon.com AMZN 3.95 5 Meta Platforms META 3.03 6 Broadcom AVGO 2.45 7 Alphabet (Class A) ...