Articles, tips & resources from the team at BFA.
When you retire and begin to support yourself with portfolio withdrawals, life changes for your portfolio as well as for you. There are new risks, taxes, and other considerations for your investments; new questions about how best to raise the cash. Often there are unexpected emotions that arise as you draw down assets, causing cracks to appear between funding your retirement dreams and wanting to make the money last. A retirement cash-management plan can help bridge the gap.
Last year was one of the worst years in the past century for the traditional 60% stock, 40% bond portfolio, worse than during the 2008 credit crisis and nearly as bad as during the Great Depression in the 1930’s. Was this the death knell for traditional asset allocation, and should investors consider something different to protect their financial assets going forward?
The bargain that investors make with bonds is clear: in exchange for holding the most boring financial asset on the planet, they’ll receive slow, steady, but positive investment returns to cushion their far more exciting, but unreliable stocks. This year the agreement has been breached: bond prices have fallen alongside stocks as central banks raise interest rates to dampen inflation. How worried should investors be about this development and what, if anything, should they do about it?
2021 marked the third year in a row of positive returns in most developed stock markets. For U.S. stocks, it was one of the best years on record and continued a remarkable run that few, if any, people expected after the 2008 financial meltdown. Stocks are volatile now, though, so people are asking, Is it still safe to invest?
They say that the eyes are a window to the soul, but there’s nothing like a financial windfall to provide a glimpse into our emotional undercurrents. The opportunity to invest new cash from a business sale, inheritance, or other source often makes even the most committed investor pull up short and ask, Is now really the best time to put more money into the market?
Today, we have about 4,000 publicly traded companies in the U.S. stock market and, according to the World Bank, nearly 40,000 companies around the globe, each with their own destiny in an ever-changing world. How can we identify the stocks that are likely to grow and prosper in the coming years so that our financial accounts will as well?
When the future is uncertain and we can’t see the way ahead, we have a choice. We can squint and work even harder to figure out the most likely path and bet on that. Or we can broaden our view to imagine a range of potential paths and make decisions knowing we’ll probably need to adjust as we move forward.
In the 1940’s, as the United States entered World World II, forest-fire prevention became a national security concern, particularly in California, where the dry forests were at risk of bombardment by sea. With most firefighters deployed abroad, the Forest Service needed a way to enlist help from a general public long accustomed to fires being somebody else’s responsibility.
It was the early 1980’s, just after the debut of MTV and right before Apple launched the Macintosh personal computer. Future economics professor Campbell Harvey was considering what to study for his Ph.D. thesis at the University of Chicago. The world had just emerged from a traumatic recession, so he decided to see if there might be a way to anticipate the next slowdown. Intrigued by an academic paper written two decades earlier, he looked at whether the bond market held any helpful information, and panning through rivers of data, he found gold.
When the Michelin brothers Andre and Edouard began their travel guide in 1900 as a marketing tool for their tire company, there were fewer than 3,000 cars in France. The roads were a primitive, local network, often unmarked, and there were no gas stations – drivers had to carry a metal container into a pharmacy to purchase fuel.
After yesterday’s stock market drop, the usual alarming news articles appeared, but more interesting were the reader comments that tracked each publication’s editorial focus:
“Stocks Plunge, as Fresh Tensions With China Batter Tech Shares,” The New York Times:
Well now. The stock market is starting to display the same kind of unpredictable behavior exhibited by Trump since before he was elected, not quite knowing how to respond to the conflicting stimuli heaped upon the economy in the many months afterward. Gee...didn't see that coming.
