Investing Styles
The two basic investing styles are growth and value. While one style tends to perform better at any given time, the dominant style varies over time. The basic elements of each style include:
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October 21, 2010
July 25, 2010
Why Asset Allocation Strategies Are Necessary
Your asset allocation strategy represents your personal decisions about how much of your portfolio to allocate to various investment categories, such as stocks, bonds, cash, and other alternatives. When stock market returns were above average for an extended period, investors did not have much interest in asset allocation. Then, the best strategy seemed to be to only own stocks. But with the stock market volatility of the past several years, investors are again focusing on asset allocation. Some of the advantages of an asset allocation strategy include:
Continue reading "Why Asset Allocation Strategies Are Necessary" »
May 25, 2010
When to Rebalance Your Portfolio
Simply put, rebalancing a portfolio means restoring it to your long-term asset allocation plan so that you get back on track with the risk/reward strategy that meets your goals and risk tolerance. This allows you to systematically follow an important investment strategy that many investors find difficult to accomplish -- buy low and sell high.
March 24, 2010
Asset Allocation Revisited
No one enjoys the recent market fluctuations. But if these fluctuations have caused you extreme discomfort, then it's probably time to reassess your asset allocation. To do so, follow these four steps:
July 13, 2009
Buying Stocks When Prices are Low
For some investors, a long or steep decline in the price of a stock is a signal to beware. For others, it's a temptation to pick up a bargain at a steep discount and make a handsome profit when the stock rebounds. In practice, it takes a lot of savvy to accomplish. Here are a few tips that will help you know when and when not to buy stocks.
March 6, 2009
The Balance Between Risk and Return
One of the most basic investment principles is that returns reward you for the risks that you take. While investors are often uncomfortable with the concept of risk, it is this uncertainty that makes higher rates of return possible. Below are some basic investment principles related to risk and return:
March 4, 2009
Does the Buy and Hold Strategy Still Make Sense?
We all know the basics -- design an asset allocation plan, ignore market fluctuations, and stick with the plan for the long term. In other words, become a buy-and-hold investor. But in an era where everything seems to change overnight, is it realistic to expect to find investments you'll be comfortable owning for years or even decades?
Continue reading "Does the Buy and Hold Strategy Still Make Sense?" »
February 3, 2009
The Basics of Asset Allocation
The theory behind diversification, or asset allocation, is to spread your investments across different asset classes to help protect your portfolio from downturns in any one asset. Diversification is a defensive strategy -- it is meant to protect your portfolio during market downturns and to reduce your portfolio's volatility.
January 10, 2009
Investment Portfolio Mistakes
Investing is a gradual process -- purchasing some investments and selling others as the years go by. After a period of years, this can result in a mixture of investments that don't fit your overall investment strategy. Thus, periodically review your portfolio, watching out for these common mistakes:
December 8, 2008
Currency Fluctuations and Foreign Investments
An international investment's return is based on two factors -- the investment's return in its local currency plus currency fluctuations. For example, suppose you purchase a British stock whose price increases 10% in one year in terms of British pounds. If, during that same year, the British pound increased in value by 5% compared to the U.S. dollar, your total return would be 15% -- 10% from the investment's return and 5% from currency fluctuations. However, if the British pound decreased by 5%, your total return would be 5%.
Continue reading "Currency Fluctuations and Foreign Investments" »
December 3, 2008
Is It Time to Consider International Investing?
During the 1990s, the U.S. stock market significantly outperformed international stock markets. International investments drew little attention during that time. But now the situation has reversed, with international investments outperforming U.S. stock investments over the past few years. Is now the time to take another look at international investments? Before deciding, consider these four main points:
Continue reading "Is It Time to Consider International Investing?" »
October 2, 2008
High Yield Dividend Payers Can Help Preserve Your Portfolio
In these turbulent times, it's hard to find safe places to invest. Many people are watching their 401k funds shrink before their eyes, particularly if they held any significant portion of their accounts in finance sector investments. Meanwhile, there are some stocks that are quietly paying dividends as usual. There's nothing like sending cash to each investor every three months to buoy confidence in a company's stock. That's exactly what World Wrestling Entertainment Inc. (NYSE: WWE) is doing. The company issued a statement on Monday that it "feels confident it can fund the dividend for the long term." The WWE press release cited its strong cash flow and healthy balance sheet.
Continue reading "High Yield Dividend Payers Can Help Preserve Your Portfolio" »
September 24, 2008
What is the Smartest Money Doing?
Warren Buffett is one of the richest men in America. His investment expertise has put billions in his own pockets and made many millionaires out of those who invested in his primary investment vehicle, Berkshire Hathaway (NYSE: BRK-A). Buffett's track record of successful gains while avoiding big losses is among the best in the world. So what is Warren Buffett buying now? He's buying investment banks. That's right, in the middle of what may be the worst banking crisis in the last 75 years, the man who is arguably the greatest living stock-picker is putting his money in investment banking. According to Bloomberg, he is purchasing $5 billion in perpetually preferred stock in Goldman-Sachs (NYSE: GS). This preferred stock has a guaranteed 10% annual dividend. That means Warren Buffett will make a half billion dollars every year that he holds this investment if the value of the shares don't change at all. Of course, Goldman-Sachs maintains the option to buy the shares back from Buffett at any time - so long as they add a 10% kicker on top of the current value.
August 14, 2008
Benefits of Low-Correlated Assets
At first glance, asset correlation may seem like a complex topic. However, it is important to understand the concept and how it affects your portfolio. By combining assets with low correlation, you can potentially improve portfolio returns while reducing risk.
June 4, 2008
Bond Strategies Over Your Lifetime
A common misconception regarding bonds is that they are only appropriate for older or more conservative investors. However, bonds should be considered by all investors as part of a well-diversified portfolio, even though their role may change over your lifetime.
May 9, 2008
Asset Allocation Strategy
Perhaps the most important move you can make for your investments is to properly diversify your portfolio. By investing in a mix of stocks, bonds, and cash, you'll reduce the risk of a significant loss.
January 4, 2008
What Is Dollar Cost Averaging
If you find it difficult to decide when to invest, consider a dollar cost averaging strategy. Dollar cost averaging involves investing a set amount of money in the same investment on a periodic basis. For instance, instead of investing $48,000 in one stock immediately, you might decide to invest $4,000 in that stock at the beginning of each of the next 12 months. Thus, you don't need to think about when to invest. You just follow your strategy and continue to invest on a periodic basis.
July 16, 2007
Investor Mistakes
When making decisions about your investment portfolio, try to avoid these common investor mistakes:
June 8, 2007
Monte Carlo Analysis
A Monte Carlo simulation is a complex mathematical process that estimates the probability of reaching specific goals in the future. This method is often used to determine the probability that your investments will last for a certain number of years during retirement.
March 9, 2007
Have You Rebalanced Your Portfolio
When you developed your asset allocation strategy you did it for a reason. You wanted to control your portfolio’s risk by deciding how to allocate among different asset classes. However, your portfolio will not stay within that allocation by itself. Since different investments earn different rates of return, over time your allocation will get out of line. Thus, you need to review your portfolio periodically and make adjustments to rebalance it.
February 5, 2007
Implications of Investment Theory
Many investment principles used to develop investment portfolios derive from one investment theory: the capital asset pricing model. What exactly is the capital asset pricing model, and how does it apply to your particular investments?
January 22, 2007
Asset Allocation Tips
Unfortunately, there is no one asset allocation plan that is suitable for all investors. You need to evaluate your risk tolerance, time horizon for investing, and return needs to determine how you should allocate your portfolio among the various investment categories. To help you with those decisions, consider the following ten points:
January 14, 2007
ETFs Offer Access to the Commodities Markets
New Commodities-based ETFs are opening up commodities markets and commodities-based strategies to the average investor that previously would have been difficult and require sophisticated expertise to implement in their portfolios.
Continue reading "ETFs Offer Access to the Commodities Markets" »
January 1, 2007
First International Real Estate ETF Launched
On December 19th, right before the Holidays, State Street Global Advisors launched the first Exchange Traded Fund (ETF) designed to track overseas real-estate stocks. The streetTracks Dow Jones Wilshire International Real Estate ETF is traded under the symbol RWX on the American Stock Exchange.
Continue reading "First International Real Estate ETF Launched" »
December 13, 2006
What Are American Depository Receipts
American Depository Receipts (ADRs) are the form in which foreign stocks trade on U.S. stock exchanges. An ADR is a negotiable certificate issued by a U.S. bank (the depositary), representing shares of a foreign stock. The original foreign stock certificates are owned by the bank and held in the issuer’s country. Each ADR can represent a multiple or fraction of the original foreign stock. This ratio is set by the depositary so the ADR’s price falls within a range considered typical for U.S. stocks. ADR's offer several benefits for individuals wanting to purchase stocks on foreign stock exchanges.
November 17, 2006
Stick With Your Investing Strategy
We all know the basics — design an asset allocation plan, ignore market fluctuations, and stick with the plan for the long term. In other words, become a buy-and-hold investor. But in an era where everything seems to change overnight, is it realistic to expect to find investments you will be comfortable owning for years or even decades?
October 29, 2006
The Loser's Game
Warren Buffett, perhaps the greatest investor alive today, has an amusing way to describe his rules for investing:
Rule #1 — never lose money
Rule #2 — don’t forget rule #1
Although this may seem like an overly simple and conservative way to succeed, I hope to show you that these simple rules hold the key to successful investing for the vast majority of people: understand when you are playing a loser’s game and then play accordingly.
October 11, 2006
Stock Allocation
Your asset allocation mix represents your personal decisions about how much of your portfolio to allocate to various investment categories, such as stocks, bonds, and cash. How much you allocate to each category depends on your financial objectives and personal circumstances. However, it is a percentage that is likely to change over time. As your needs for safety of principal and a steady income stream become more important, the percentage of stocks you own is likely to decrease. Some factors to consider when deciding how much to allocate to stocks include:
September 12, 2006
Reviewing a Company's Annual Report
Whether you’re researching a stock to purchase or monitoring a stock you own, the company’s annual report should be central to your analysis. Annual reports contain a wealth of financial information, which can provide significant insight into a company’s operations and future prospects.
September 7, 2006
Should You Favor Growth or Value Investing
The two basic investing styles are growth and value. While one style tends to perform better at any given time, the dominant style varies over time. The basic elements of each style include:
Continue reading "Should You Favor Growth or Value Investing" »
August 10, 2006
Steps for Global Investing
If you want to invest in international investments, you may want to consider a systematic approach. Some of the steps include: the percentage of your portfolio to allocate to international investments; whether you want to invest based on countries or companies; familiarity with the available investment options; risks involved in international investing; and reviewing and monitoring your investments.
August 8, 2006
Why Consider International Investing
During the 1990s, the U.S. stock market significantly outperformed international stock markets. Never a particularly large percentage of U.S. investment portfolios, international investments drew even less attention during that time. Due to the significant volatility in the U.S. stock market over the past several years, is now the time to take another look at international investments? Before deciding, consider the answers to these questions on the subject:
July 26, 2006
1031 Exchanges, A Tax-Deferred Real Estate Strategy
When the time comes to sell your real estate, some owners of highly appreciated real estate could be staring at a substantial capital-gains tax bill. A section of the Tax Code may help you convert your appreciated property into an income stream—while deferring up to 100% of the capital-gains tax that would otherwise be due on the sale.
Continue reading "1031 Exchanges, A Tax-Deferred Real Estate Strategy" »
May 15, 2006
Take the Emotion Out of Selling
Selling an investment can be an emotional decision, especially if the investment has experienced a loss. Many investors can’t stand the thought of selling at a loss, preferring to wait until the investment rebounds to the breakeven point. However, the investment may not rebound to that level or may take a very long time to do so. In the meantime, you could have been invested in other alternatives with better prospects.
May 14, 2006
Keeping Your Expectations in Line
When designing an investment program, your expected rate of return is a critical element in determining how much to invest to meet a future goal. Since no one can predict future returns, the expected rate of return is typically estimated based on an analysis of past returns for various investments.
May 11, 2006
The Benefits of Dollar Cost Averaging
Dollar cost averaging involves investing a set amount of money in the same investment on a periodic basis. Since a fixed amount of money is being invested, more shares are purchased when prices are lower and fewer shares are purchased when prices are higher. Of course, whether dollar cost averaging produces a higher return than investing a lump sum immediately depends on whether the investment’s price rises, declines, or fluctuates over the investment period.
April 25, 2006
Exclusive Interview with Rydex Investments
ManagingMoney.com sat down recently with Jim King, The Director of Portfolio Management, for Rydex Investments. Rydex Investments manages in excess of $13 billion dollars in over 51 mutual funds. Long known for innovation, Rydex is currently one of the largest sponsors of Exchange Traded Funds (ETFs), and one of the few Fund Families offering Short and Leveraged Funds. Jim gives insights as to how investors can use Rydex's unique investment vehicles to gain market exposure to specific market sectors or control market risks.
Continue reading "Exclusive Interview with Rydex Investments" »
April 17, 2006
Why Is Asset Allocation Important?
The theory behind asset allocation is to spread your investments across different asset classes to help protect your portfolio from downturns in any one asset. Since different investments are affected differently by economic events and market factors, owning different types of investments helps reduce the chances that your portfolio will be adversely affected by a particular risk type. Does asset allocation really accomplish this goal?
April 4, 2006
An Interview with Three Value Managers
Consuelo Mack on Wealthtrack recently interviewed three top value managers, David Winters, Susan Byrne, and John Montgomery. David Winters is portfolio manager for the Wintergreen Fund and specializes in global value investing, Susan Byrne is CEO of Westwood Management that runs the Westwood Large-Cap Equity Fund and focuses on large-cap U.S. stocks, and John Montgomery with Bridgeway Funds uses quantitative computer models in his search for value. Each gave their perspective as to where they are finding value despite stock markets and interest rates both at recent highs.
March 30, 2006
ProFunds Launches First "Short" Japanese Fund
ProFunds announced today the launch of the first country-specific mutual fund for investors who believe the Japanese markets are ready to drop. Called the UltraShort Japan ProFund, the funds objective is to gain twice as much on a percentage basis as any decline on the U.S. traded, dollar-based Nikkei 225 futures contract on a daily basis.
Continue reading "ProFunds Launches First "Short" Japanese Fund" »
March 28, 2006
First Oil ETF Expected to Launch Next Week
MarketWatch is reporting that the American Stock Exchange has filed to launch the first Exchange Traded Fund (ETF) that would track crude oil prices. This would be a new vehicle available for individual investors to try to make money based on their evaluation of the direction of crude oil prices as opposed to previously only being able to use mutual funds, individual energy stocks, or riskier futures investing.
www.marketwatch.com/News/Story/Story.aspx?guid=%7B5AF466F0%2D7629%2D47C1%2DA21E%2D0969CAFB1498%7D&dist=rss&siteid=mktw
March 23, 2006
Grab your Shorts, Real Estate Values may be Dropping
In another sign that real estate prices may have "topped out" and are in fact going lower, short selling of Real Estate Investment Trusts ( REITs) rose in the four week period ending March 15th, the first increase since last November.
Continue reading "Grab your Shorts, Real Estate Values may be Dropping" »
October 11, 2005
The Basics of 1031 Real Estate Property Exchanges
If you have business or investment property you’d like to sell, take a look at the 1031 exchange rules before doing so. These rules allow you to sell one property and purchase another of “like kind”, deferring any gains. “Like kind” means the property must be used for business or investment purposes, which could include apartment buildings, office buildings, industrial buildings, commercial buildings, rental housing units, raw land, farms, and ranches. You do not have to sell and buy the exact same type of property. Thus, you could sell undeveloped land and purchase a commercial building, deferring the gain. Or you could sell the building used in your business and purchase an apartment complex, again deferring the gain.
Continue reading "The Basics of 1031 Real Estate Property Exchanges" »
September 12, 2005
Investing in Foreign Stocks at Home
Looking for a way to invest in specific foreign companies without learning all the intricacies of other countries’ stock markets? You may want to consider American Depositary Receipts (ADRs).
June 14, 2005
Taxes and Investing Strategies
One of your portfolio’s largest expenses is probably taxes. Ordinary income taxes on short-term capital gains and interest income can go as high as 35%, while long-term capital gains and dividend income are taxed at rates not exceeding 15% (5% if you are in the 10% or 15% tax bracket). One way to help keep your portfolio growing is to invest in a tax-efficient manner. Some suggestions include:
Make Rebalancing Your Portfolio A Habit
We all know we should rebalance our portfolios periodically to ensure they stay in line with our targeted asset allocation. Why, then, is it so difficult for us to do this? The primary reason is that rebalancing goes against our basic instincts. With rebalancing, you are generally selling those investments performing well to purchase those that are underperforming, which just doesn’t seem to make sense. It might help to remember that by rebalancing, you are following a fundamental investment principle — you are buying low (those investments that are underperforming) and selling high (those investments that are performing well).
Continue reading "Make Rebalancing Your Portfolio A Habit" »
April 16, 2005
Time to Rebalance Your Portfolio
With an asset allocation strategy, you can’t just allocate assets in your portfolio once and then forget about your portfolio. Over time, your actual asset allocation will stray from your desired allocation because different investments in your portfolio will experience different rates of return. At least annually, review your portfolio to see if changes are needed to bring your allocation back in line. Some factors to consider include:
March 13, 2005
Diversifying All Your Assets - Income, Home, & More
When asked how their assets are diversified, most people respond by indicating how much of their portfolio is divided between stocks, bonds, and cash. But looking at your overall financial diversification means more than simply looking at your investment portfolio — you need to examine all your assets. Some items to consider include:
Continue reading "Diversifying All Your Assets - Income, Home, & More" »
February 1, 2005
Using Diversification to Control Portfolio Volatility
The past few years have taught investors the meaning of volatility in investing. While investors weren’t that concerned about volatility before 2000, when it worked to their advantage, the negative volatility of the past few years has been much tougher to deal with.
Continue reading "Using Diversification to Control Portfolio Volatility" »
January 15, 2005
Reevaluating Your Investment Portfolio
Periodically, you should thoroughly review your portfolio to ensure it is still helping you work toward your investment goals. Follow these steps during that review:
October 12, 2004
Focus on Investment Fundamentals
When faced with all the decisions that need to be made to ensure you select the proper investments to meet your long-term financial goals, it's easy to become overwhelmed. How do you choose the right combination of investments to help you reach a goal that may be decades away? The answer is to focus on the fundamentals. Make sure to get these basics right:
September 12, 2004
Dealing with Current Rising Interest Rates & Interest Rate Risk
With interest rates still at historically
low levels and the economy picking up steam, the Fed has started
to raise interest rates. The question now is by how much and how
quickly the Fed will increase interest rates. The answer is especially
pertinent to bond investors who will find their bond values decreasing
as interest rates increase. But don't totally abandon bonds just
because their values may decrease in the near term. There are
still valid reasons to hold bonds in your portfolio.
Continue reading "Dealing with Current Rising Interest Rates & Interest Rate Risk" »
July 14, 2004
Consider Dollar Cost Averaging to Reduce Investment Volatility
We all know we should buy low and sell high, but determining when that occurs
is difficult. Thus, consider using a strategy like dollar cost averaging to help
with those decisions.
Continue reading "Consider Dollar Cost Averaging to Reduce Investment Volatility" »
Watch Out for These Investing Mistakes
Investing is a gradual process - purchasing investments and selling others
as the years go by. After a period of years, this can result in a mixture of investments
that don't fit your overall investment strategy.
May 1, 2004
When Selling Investments, Don't Make These Mistakes
An important part of any investment strategy is to develop a methodology for ultimately selling your investments. Unfortunately, many investors sell based on emotional factors, making one of several mistakes:
Continue reading "When Selling Investments, Don't Make These Mistakes" »
August 1, 2003
The Investment Sell Decision
For many investors, the only decision more difficult than which investment to purchase is when to sell that investment. Although there are no hard and fast rules, consider these general guidelines:
Dealing with the Possibility of Lower Investment Returns
When designing an investment program, your expected rate of return is a critical element in determining how much to periodically invest to meet a future goal. Since no one can predict future returns, the expected rate of return is typically estimated based on an analysis of past returns for various investments. So what return can you expect in the future for stock investments? The average annual return for the Standard & Poor's 500 (S&P 500) for the period from 1926 to 2002 was 10.2%*, but you don't want to simply use that return without determining whether it is a reasonable return for the future.
Continue reading "Dealing with the Possibility of Lower Investment Returns" »
June 1, 2003
Getting Your Investment Portfolio Back On Track
The recent market declines have been steeper and of longer duration than many expected, making it difficult to determine how to adjust your portfolio. Should you leave it alone, hoping the market will quickly rebound to much higher levels? Or should you sell everything and put your money in cash accounts? The appropriate answer probably lies somewhere between those two extremes. What you should do is thoroughly review your portfolio. Consider these tips when analyzing your portfolio:
Continue reading "Getting Your Investment Portfolio Back On Track" »
May 1, 2003
When Did You Last Rebalance Your Portfolio?
These days, many people don't even want to look at their portfolio, let alone think about rebalancing it. But you developed an asset allocation strategy for a reason -- you wanted to control the risk in your portfolio by deciding how to allocate among different asset classes. Your portfolio won't stay within that allocation by itself. Since different investments earn different rates of return, over time your allocation will get out of line. To keep your allocation in line, you need to review your portfolio periodically and make adjustments to rebalance it.
Continue reading "When Did You Last Rebalance Your Portfolio?" »
Should You Invest Globally?
For much of the 1990s, the U.S. stock market significantly outperformed international stock markets. Never a particularly large percentage of U.S. investment portfolios, international investments drew even less attention during this time. But the U.S. stock market has experienced its third consecutive year of negative returns, with many expecting U.S. stocks to encounter below-average returns in the future. Is now the time to take another look at international investments? Before deciding, consider the following:
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Recent Posts
- Investing Styles
- Why Asset Allocation Strategies Are Necessary
- When to Rebalance Your Portfolio
- Asset Allocation Revisited
- Buying Stocks When Prices are Low
- The Balance Between Risk and Return
- Does the Buy and Hold Strategy Still Make Sense?
- The Basics of Asset Allocation
- Investment Portfolio Mistakes
- Currency Fluctuations and Foreign Investments
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