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Don't Fight the Central Bank Rally
Tweet Share on Facebook January 31, 2013 CommentAfter the financial and economic disruptions and political shenanigans of the past several years, I suppose nothing should surprise us. I was nevertheless thrown a bit when headlines began appearing suggesting that the U.S. government could circumvent the statutory limit on Treasury debt by minting a $1 trillion coin and depositing it with the Federal Reserve. The ploy was supposed to work because, while the Federal Reserve has sole authority to print greenbacks, the Treasury Department has the power to mint coins, and the way the government pays its bills is to deposit money (normally tax receipts and bond proceeds) with the Federal Reserve and then write checks on those deposits. So why not mint a coin of whatever value, deposit it with the Fed, and then start writing checks—all without issuing another dollar’s worth of treasury bonds?
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Is It Time To Buy This Rally?
Tweet Share on Facebook January 30, 2013 CommentBack in September, I wrote about the importance of diversification even as the market hits new highs as it did during that month when the S&P 500 edged above 1,400. The index closed recently at 1,500, near a five-year high. This compares to the low point for the index during the market downturn of 2008-09 of 677 reached on March 9, 2009. Now, we’re close to the all-time high for the index, which was 1,565 reached on October 9, 2007.
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Don't Make These Five 401(k) Excuses
Tweet Share on Facebook January 29, 2013 CommentExcuses, excuses. Long before "the dog ate my homework," humans were procrastinating and otherwise messing up—always with some excuse or another. We all know it’s counter-productive, but we do it anyway.
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What is Interest Rate Risk?
Tweet Share on Facebook January 28, 2013 CommentWith interest rates at record lows, the real interest rate risk is that rates will rise, causing the value of all sorts of bonds and bond funds to fall. Interest rates and bond prices move in opposite directions. All else being equal, when interest rates rise, the value of a bond falls in value. Conversely, when interest rates fall the value of a bond rises. Interest rates have been falling for over 20 years, which is the reason why the performance of bond funds has been so spectacular during that time.
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Active Trading Isn't for Most Investors
Tweet Share on Facebook January 25, 2013 CommentWhen I was younger, I was wary of investing because I thought of it in terms of active trading. I thought I needed market timing skills and a great deal of luck.
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Who’s a Better Trader: Man or Machine?
Tweet Share on Facebook January 24, 2013 CommentThe question of whether humans or computers are better at trading has been around since the era of the punch card. The question rings in the halls of some of top money management firms and Ivy League schools today.
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Why an Investment Process is Critical
Tweet Share on Facebook January 23, 2013 CommentIn the investment world the disclaimer “past performance is no guarantee of future performance” is often used, with good reason. If we apply this to the world of mutual funds any number of factors can come into play. I and many other advisers have migrated in large part to passive, low-cost index funds and ETFs simply because so few active managers deliver top returns year in and year out.
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Know Your Retirement Distribution Basics
Tweet Share on Facebook January 22, 2013 CommentYour retirement strategy should include a distribution plan. It may seem obvious at first glance, but each individual may have a different strategy for taking their money out depending on their personality and needs in retirement.
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How to 'Dedupe' Your Mutual Funds
Tweet Share on Facebook January 18, 2013 CommentWhen I ran a software development company, the search term that landed us the most website traffic was “dedupe iTunes.” People who had two copies of, for example, Justin Bieber’s “Baby,” didn’t need the extra copy, and my partner had written a simple script to remove the extra copy, freeing up space for more Justin Bieber songs.
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ETFs vs. Mutual Funds: Which is Better?
Tweet Share on Facebook January 17, 2013 CommentIn one corner with over $9 trillion in assets is the experienced, long-standing heavyweight champion of the investment world: Mutual funds. In the other, with over $1 trillion in assets, is the young and nimble, undefeated rival: Exchange-traded funds, or ETFs. Both competitors are vying for your hard-earned life savings. Which is better for you? You be the judge over the next five rounds:
