The current bull market has been steaming ahead since the market bottomed in March 2009. Consumers of investment advice have noted that passive, buy and hold strategies have outperformed most active strategies over this time period, giving some the false impression that ‘risk management,’ in the context of tactically changing portfolio asset allocation to defend against bear markets, is a fools game.
Successful investing is all about balancing risk with return. The return part seems easy enough… we all want to see the value of our investments go up. However, investment risk is a bit more complicated than you might think. Let’s take a look at what investors mean by risk, and how you should consider it…
Dave has a problem: He has his eyes on a beautiful 1978 Ford Pinto — barely used. It’s a bargain for $24,000. In a world without inflation, Dave could simply save $8,000 a year for three years and he would have exactly what he needs to buy his dream car. But what happens when we…
Every successful investor must begin by understanding the difference between saving, investing, and speculating. If you get those confused, you run the risk of losing a lot of money. Let’s start with saving… Saving can be defined as the process of setting money aside in order to make a purchase a short time in the…
When it comes to giving financial guidance to couples, advisors encounter the same dynamic again and again: One spouse is almost always the champion of the family’s finances. This person follows the markets, reads the Wall Street Journal, and has either invested the family’s funds or has worked directly with an advisor. This video series…
The second quarter started in somewhat choppy fashion as small cap and other high flying momentum stocks continued to face pressure as investors decided to shed stocks with swollen valuation multiples. The major averages fared better than their risky counterparts, and after a brief dip stocks began their ascent towards record breaking highs on the back on improving economic data, decent earnings growth, and continuing liquidity support from global central banks.
Meanwhile commodity markets appeared to work off some of their overbought readings from earlier in the year as they treaded mostly sideways during the quarter. Within fixed income, the bond market also fared well as investors continued to flock towards anything with a yield, foreign bond markets bubbled, and a number of technical factors came together to keep bond investors satisfied despite meager nominal yields.
NOTE: There is a 100% probability that bull markets will be followed by bear markets. This article is not a forecast about imminent market behavior. For our latest views on markets, clients should read our market review. Financial fire drills are all about testing your emotional response to a bear market, which you should be doing all the time. (And it’s not a bad idea to check your emotional reaction to bull markets, as well.)
When I was a kid, my family lived in a two-story colonial in South Jersey. Once each year, to the great excitement of all concerned, my parents had my brother, sister, and me conduct a fire drill. We got to climb out of our bedroom window onto the roof of the garage, and then down from there.
Our house never suffered a serious fire, and we never had to make a rooftop escape, but my parents were still glad that we’d practiced what we had to do, just in case. It was a very good idea.
Pinnacle’s Chief Investment Officer, Rick Vollaro, explains why the investment team has developed a new view in response to economic developments.
First quarter market performance was as whippy and volatile as the weather. Unusually cold temperatures in the U.S. not only froze much of the country’s population, but it also wreaked havoc on the quality of economic data, and kept markets on edge regarding how investors should be positioned. Geopolitical issues also rose from the ashes as various emerging markets had currency issues and Russia showed poor sportsmanship and invaded the Ukraine shortly after the conclusion of the Olympic Games.
By the end of the quarter, the markets showed mixed results, with U.S. stock and bond markets logging roughly equal returns, and international markets showing large variations depending on country and region. Commodities appeared to benefit the most from the weather and geopolitical environment, and they bounced to a very strong quarterly return.
It’s true that opposites sometimes attract. But what do you do when you and your significant other are opposites when it comes to investment strategy? You might be an aggressive, pedal-to-the-metal investor, while your partner is more financially conservative. (Or vice versa.) A difference like that can be a huge obstacle to developing a sound financial plan.
So what can you do?