Investing Expert Voices Today

A Great Rule of Thumb

As I mentioned a while back, Frank Armstrong—a terrifically smart CPA—and I are working on a book that will be called Rescuing Your Retirement. While talking the other day, Frank came up with this wonderful rule of thumb: More…

Don't try to catch a falling knife

A confession. I sometimes buy individual stocks. Not often. And never with very much money because I really do practice what I preach and believe in having a fully diversified portfolio. (Besides, I have three kids in college. There isn't a whole lot of money to spare.) But, I will from time to time I will buy a stock because I think I have spotted something that most people have missed. So, how do I with my little investing hobby.? Not great. My biggest failing is that I try to identify when I think the price of a good stock has hit bottom. Almost always, I buy too soon. What triggered this thought was the price of Citibank. I thought about buying it when it fell to $10 a share. And again at $8. And I almost placed an order when it dipped below $4. More…

Do as I say?

Back when dinosaurs ruled the earth, I had a radio talk show where for three hours a day I answered financial questions about such things as the best way to pay for college, and what kind of mortgage to get. Eventually, we arranged it so I could do the program out of my office at Financial World in New York—callers liked that because periodically they would hear police siren in the background—but at first I had to go into the studio. The guy on before me, a charming fellow, did a similar show. He was a legend in the business, someone I grew up listening to. One day, he was arrested for insider trading. More…

A Quick Portfolio Quiz

Here is news that won't stop the presses: The Stock Market Meltdown of 2008 has devasted just about everyone's savings portfolio. But in addition to dramatically reducing the amount of money you have, it may have shifted the percentage of money you have in various asset classes. (For example, the percentage of your holdings in bonds and cash are probably greater than they were, given how far stocks have fallen.) More…

Stay the course. Stay the course. Stay the course. Stay the course. Stay the course.

I quote verbatim from today's Wall Street Journal: "Last week's 4.8% swoon was the worst weekly decline since U.S. stocks began their rally on Nov. 21, and now the fear is that the market may be beginning another leg down." Let me see if I have this right. Last week the Journal said, in the article obliquely referenced in the quote above, stocks were due to rise. Today, they are saying they may fall. I am not picking on the Journal. It is a great paper. I am picking on the way people cover investing. They need to write something every day. But that doesn't mean you have to do something every day with your money. Or every month. If you are happy with the way you have allocated your money, then, in the words of the headline "stay the course." More…

Example 671 of Why to Think Long Term

It isn't often I get a chance to impress a bunch of 20 year-olds, otherwise known as my kids, but it happened yesterday. We are down in Florida on vacation, and over breakfast--well brunch; they don't get up early--I said with absolutely confidence that I could predict how the stock market would do for the day.I promised it would drop. How did I know? I didn't of course. But I did read a story in Wednesday's Wall Street Journal about how stocks were up 20% from their November lows. The story went on to hint that maybe the carnage on Wall Street was over. Any time a media person says "A," think "Z" and so I predicted the down day and I was correct. The Dow fell 2.7% The point: Ignore day to day gyrations in the market. More…

The Hybrid Car Theory of Investing

I am a late adapter. For example, I only just started using my cell phone for just about all my calls, so it is probably not surprising that I haven't ever driven a hybrid car until now. But, I rented one this week--I didn't seek it out; it is all that the people at Hertz had--and I love it. Yes, sure, I like the fact that I am helping to save the environment, but the appeal to an old cheapskate me is the gas mileage. I am getting about 50 miles to the gallon. What has this to do with investing? A lot. More…

The 90%-10% rule

Because I have the world's most annoying accountant--the man has absolutely no sense of humor about meeting deadlines and filing accurately; he is in favor of both--I have already started getting my papers together to help prepare my 2008 tax returns. Here is something I have noticed in going through my files. I divided by savings/investings into two buckets: Some 90% went to my retirement. The rest to things like my emergency fund and general savings. I didn't consciously plan it this way, but I think it is a good way to go. Like you, I am not getting any younger. (I am 54.) And like you, I saw my retirement accounts get hammered last year. (Even with making contributions, I was down 30% year to year.) So, my retirement accounts are a priority. More…

One New Year’s Resolution

For most Americans the New Year really starts today. Everyone is done visiting for the holidays and is returning to work or school. I am a not a big believer in resolutions, but here is one I plan to keep. I will continue to save aggressively for retirement. Yep, 2008 on Wall Street was a disaster. The Dow was down 33.8%. The S&P fell 38.5% and the NASDAQ was even worse—off 40.5%. Even with that dismal performance, over then last 85 years or so, stocks have outperformed every other investment there is. If you want to have enough money to retire the way you want, you have to keep investing in stocks. I plan to. I hope you will too. And, of by the way, “Happy New Year.” More…

Full disclosure all the time, please

"Analysts suspect GE's Jeffrey Immelt may announce at his annual state-of-the-company address a decision to stop offering quarterly earnings forecasts," the Wall Street Journal reports this morning. I hope that is not the case. Yes, I believe in investing for the long-term. And yes, I believe that the pressure of having to hit Wall Street's expectations can make companies focus more on the short-term than they should. But the quarterly announcements: a) let investors (like us) know every three months where the company stands; and b) imposes a real discipline on firms. More…