Here’s a quick, one-question quiz — no cheating, please: Would a Dow Jones Industrials Average of 650 have been abnormally high, or abnormally low in the summer of 1981? …Play along for a minute because there’s method to the madness, trust me.… Continue reading
For two successive columns now, the JLI has been unreserved in his bearish long-term outlook for global equities markets. As noted previously, the “Relative Strength Indices” (RSI) of all the major exchanges are operating in perilously overbought territory, and P/E ratios are also at or near historic highs. Economists at Bank of America keep track of nineteen mostly inside-baseball statistical “triggers” for a bear market, and over the past three months eleven of them have been triggered. The arrival of the next bear market is, in the eyes of most seasoned pros out there, no longer so much a question of whether as a question of when. Which leaves only the question of how to weather the gloom.
Fortunately I am here to help, with five recommendations for ETFs to consider as part of a defensive portfolio — analyzed with strategy breakdowns, geek-out statistics galore, and more than a few helpful visuals. The entire column should take about fifteen minutes to read.… Continue reading
Investment wisdom which is also suitable to a crocheted wall-hanging won’t generally make you rich: Markets are far too sophisticated and far too beholden to the vagaries of the news cycle to kowtow to a six-word ditty. But over the years, and all indications are that this year, the popular adage that an amateur investor should “sell in May and walk away” begins to look as though it just might mark a crucial exception.
This article explores the provenance of the saying, its conformity to long-term and recent historical patterns of return, and then points its focus forward to the issue of why this year, more even than most, it might not be such a bad idea to take your grandfather’s broker at his word. The entire article should take about fifteen minutes to read. Our next article will explore just what it might mean, this year in particular, to “walk away.”… Continue reading
For decades now the conventional wisdom has favored a more aggressive investment portfolio for a person of a younger age — when he or she can afford to weather more volatility — and a more conservatively biased portfolio for persons at a more advanced age, when capital preservation takes primacy over higher returns. Such counsel rang true enough in its day, but over the next few minutes I hope to make the case that paradigms in finance have shifted so dramatically as to render this oldest of investing maxims all but toothless, if not actually flat-out wrong.
This is a long column but do bear with me because, at the end of it, I’ll be showing you what I think is the new, better way of managing risk across all segments of the age-and-demographic spectrum: an updated metric, functioning as the modern analog to our old rules about risk-return correlation, complete with a live example. The entire column will take about twenty-five minutes to read.… Continue reading