You know from recent posts how Your Survival Guy feels about too much power in too few hands. What I’m talking about is when the big three fund companies, BlackRock, State Street, and Vanguard, with their immense size, vote your shares with their politics. There was a time when indexing in stocks made sense. But what we have today is so much money chasing the same stuff. It’s like frogs in a pot. Too much consolidation of money with both stocks and bonds. When it comes to your bond money, I like a bond ladder where you control the height or length of it with differing maturities and … [Read more...]
How Effective Are Bond Ladders?
I don’t want to bore you with the details of academic studies, but it turns out that bond ladders work. Don’t take my word for it, Derek Horstmeyer, professor of finance at Costello College of Business, George Mason University, discusses his latest research in The Wall Street Journal, writing: As the Federal Reserve has signaled it will begin to cut interest rates this year, risk-averse investors have been turning to one bond strategy that works well when short-term rates are lower than long term: bond laddering. Bond laddering is an investing technique that involves buying Treasury bonds … [Read more...]
Get Around 5% on Fidelity’s Treasury Money Market
If you like getting close to 5% on your money markets, then check out Fidelity’s Treasury Money Market. Remember, even if the Fed cuts rates, it may take a while, and you might be surprised at how it unfolds. Farah Elbahrawy reports for Bloomberg: Investors are still flocking to cash funds, and Bank of America Corp. strategists say history suggests redemptions won’t begin until a year after the Federal Reserve starts cutting interest rates. Money-market fund flows rose in anticipation of the first cut over the past five rate reduction cycles, before inflows slowed meaningfully when the … [Read more...]
“I Can’t Afford to Lose Any More Money,” They Say
As you know from here, here, and here, your investment success may hinge more on how you invest rather than what you invest in. My efficient frontier (EF) series gets to the heart of this. It's a tool for looking back at the risk/reward relationship between stocks and bonds. What it helps to illustrate is that there can be more risk in having all your eggs in one basket. Easy to understand. Hard to do. The key to the EF for you is less about understanding stocks and bonds and more about you understanding you. What is your risk tolerance? What can you handle? I can tell you from experience … [Read more...]
Fight Inflation in the Grocery Store with This
It’s not every day you see shoppers whistling through the store with a cart full of gold. But looking at inflation today, isn’t that the best way to fight it? I think so. Forget bitcoin, get yourself some yellow metal, and become an inflation fighter. Katherine Hamilton discusses shoppers buying gold bars at Costco in The Wall Street Journal, writing: Craig Beauregard and Julia Edwards were at Costco COST -0.11%decrease; red down pointing triangle shopping for groceries in December when they spotted a deal that was too good to pass up: a one-ounce bar of gold. Beauregard, 33 years old, … [Read more...]
Your Investment Success or Failure May Come…
Your investment success or failure may come from how you invest, not necessarily what you invest in. As you know, the pangs of pain from losing money far outweigh the euphoria of making it. We are human. We like to win. We hate to lose. Why, then, do we tend to invest in areas that are going up instead of areas that are going down and offer good “value?” FOMO or fear of missing the boat? To understand risk and reward, I’ll point you to the efficient frontier. The Efficient Frontier, created by Harry Markowitz in 1952, measures the efficient diversification of investments that delivers … [Read more...]
FOOD INFLATION: Spending More to Buy Less
When Americans visit the grocery store today, they know that things aren't what they used to be. Food inflation is killing family budgets and shocking shoppers. In The Wall Street Journal, Stephanie Stamm and Jesse Newman take a look at food inflation over the last few years. They write: In grocery stores, a Benjamin just isn’t what it used to be. Grocery prices were up 1% in February from a year earlier, Labor Department data show. They were up 10.2% in February 2023 versus a year earlier, and were up 1.2% in February 2019 from a year earlier. Prices for hundreds of grocery items have … [Read more...]
Index Investing: Losing Your Vote in America’s Business
Are you losing your sense of place in America? Specifically, are you in touch with how you’re investing and not simply on autopilot? Because what we’re seeing with firms like BlackRock, State Street, and Vanguard (collectively managing $23 trillion), is their views are being voted with other people’s money. You, the investor, are the one with some skin in the game. Shouldn’t you be heard and not looked upon as a tool for their politics? I think so. When it comes to index investing, which used to be a passive endeavor, it’s a long way from where it started. Even the Total Stock Market Index … [Read more...]
The Danger of Ownership Consolidation
What happens when a small number of asset managers use their investors' money to control America's corporate world and, more specifically, its banks? It might not be what's best for shareholders. Instead, it may be what's best for fund managers and their friends in Washington, D.C. When it comes to banks, there are special rules that require asset management companies to operate as passive owners rather than become actively involved. Now, the FDIC is worried that the asset management oligopoly of BlackRock, Vanguard, and State Street might be getting too involved in the business of the banks … [Read more...]
Be Careful with CD Rollovers
If you have CDs rolling over into lower yields, don’t lose sight of the opportunities in fixed income. If you need help crafting your bond portfolio, let’s talk. … [Read more...]
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