Coronavirus Infects Stock Market

You’ve read about low bond yields. Well, the yields may be low, but bonds, they’ve protected portfolios like bubble wrap. (See the chart of Counterbalanced Total Returns below for the returns of bonds in years when the stock market has fallen). What investors forget time and time again, is that the key to investing is for you to get your money back. Not some of it—all of it. The income from interest on bonds, the dividends from stocks—they help you not only do that but also help you maintain your lifestyle. A lifestyle where you continue to do the things that matter to you like visit … [Read more...]

You want to do what you’ve dreamt about, right? Well, a client of mine is doing just that while on sabbatical, as he cleans up his gardening shed, and spends more time helping his parents get their estate in order. He’s doing the things we always think about but have a hard time actually doing. We laughed as I told him my clean garage thanks him for the inspiration. One of the topics we covered during our conversation was “the greater fool theory of investing”—how investors believe someone will buy their stocks at a higher price. That’s a sucker’s game. That’s not investing, and right now … [Read more...]

Who loves a market-rattling pandemic more than CNBC? It’s a ratings bonanza that allows them to fill the airwaves with 24/7 fear, and when there isn’t a pandemic, they fill it up with fast-money greed—sell, sell, sell, buy, buy, buy. Same old tune, different day. Imagine if you could get away from it all and take a deep breath (while drinking plenty of water to keep the coronavirus out of your lungs). No one knows what the coronavirus is going to do to the markets over the short-term. What we do know is, it’s causing plenty of investors (not you, of course) to be uncomfortable. A former … [Read more...]

Stocks have lost close to 2,000 points over the last two days. Futures are up a little this morning as I write to you but that doesn’t mean anything really. Which reminds me, the less you dwell on the future, the better off you tend to be as an investor. Remember, the pain you feel from losing money far outweighs the feeling of gains—mainly because (as) you get used to the gains, you become comfortable with your net worth. That’s a mistake. Much of my time working with successful Americans like you is spent talking about their lives, specifically, where they are in it. Yes, we’ve … [Read more...]

Yesterday you read that the coronavirus was causing panic in markets, sending stock prices plummeting. Below you can see that, while DJIA stock prices fell 3.54% in yesterday's turmoil, bond prices (as measured by the Ryan/NASDAQ Laddered Treasury Index) rose 1.05%, a difference of 4.59% over stocks. If you don't understand the value of bonds, this is it. Bonds are a counterbalancer in your portfolio against the volatility of stocks. Bonds will always matter to you, especially when the going gets tough. If you are just beginning to invest in bonds, consider a laddering strategy. And … [Read more...]

Over the past 52-weeks, you’ve received over five percent on any combination of short to mid-term agency, corporate, and/or treasury bonds, and that’s not counting today’s expected bond rally. Remember, bonds tend to go up when stocks go down. As the coronavirus creates panic for stock investors (futures are way down as I write to you), bonds along with safe-haven gold are rallying. What the coronavirus will mean for stock investors this year is unknown. But what’s clearly known is many stock investors head for the exits when panicked. Your key takeaway is to make sure you have your bond … [Read more...]