Common Method of Allocating Between Equity Securities and Debt Instruments Portfolio design customarily begins with a decision regarding the percentage to be allocated to equity securities versus debt instruments[1]. Allocating and rebalancing to a percentage is simple; but the percentage to be allocated is typically nothing but a rudimentary judgement call, based upon ill-defined risk […]
Recency Bias in Investing
As I watched footage of hurricane Ian wreaking havoc on the Florida coast, my four-year-old daughter asked what was going on. I gave her a brief explanation about what a hurricane is and was sure to include the point that, fortunately, they aren’t something that happens in our area. Later that day, however, when we […]
How Inflation Affects Asset Values
In 1980, the inflation rate peaked at 13.5%; higher than it had been in 60 years. The miserable economic conditions of 1980 caused by inflation are lodged into the collective American memory, and we have heard admonitions ever since that excessive money printing would result in the return of hyper- inflation. Those warnings turned out […]
Now is the time for a Steady Hand
Like many of you, this week I watched in horror and shock as Russia invaded Ukraine. Years of rhetoric and posturing had made many of us numb to Putin’s antics, and an actual invasion seemed a distant possibility just a few weeks ago. My heart goes out to the Ukrainian and Russian people, who are […]
What is the new ETF rule?
Every so often, something occurs that changes the way we invest, and we think it best to keep our clients informed regarding these changes. This year, one such change occurred: The Securities and Exchange Commission (SEC) has adopted the ETF Rule, which allows Exchange-Traded Funds (ETFs) to exchange securities within their portfolios for different securities […]
Is the Inverted Yield Curve Reason to Worry?
If you’ve been paying attention to investment news, you might be aware of the recent consternation that the “yield curve” in financial bond markets has “inverted.” (If you’re not, or aren’t entirely sure what this means, read on.) For some, the takeaway from this is immediate: if you believe in the ability of sporadic market […]
Irrational Expectations (and 3 things you can do to guard against them)
Expectations are powerful things. They involuntarily override our logic and amplify our emotional response to events based on how those events measure up to our expectations. When it comes to making decisions about our finances, emotions make poor bedfellows. In the stock market, expectations are everything. A company can have a great earnings report, but […]
Ever Seen a Retired Ostrich?
Behavioral Finance: Exploring our Biases That which I would not, that do I do! Whether you are investing your assets or putting together an overall financial plan, you are continuously faced with an onslaught of never-ending decisions. There are many points along this journey when we look back and wonder “what was I thinking?!” Often, […]