Welcome to the end of the week and another edition of Happy Hour! Just sit back, relax, and enjoy your end of the week roundup of all things interesting in the land of money.
5yr Fund Returns
October 2008 was a bad month for the market. Actually the whole year was bad. Stock mutual fund performance were abysmal. The same can be said for index funds. That year, the S&P 500 fell from 1,447 to 903, a 38% drop.
It’s had a big impact on fund performance numbers. Especially the 5 year average returns of stock funds pointed out here. But the slate is being wiped clean, so to speak, by time and with it, those numbers will improve dramatically.
As we move past October and into next year, those pitiful performing months in ’08 and early ’09 won’t be included in a fund’s 5 year annual average returns. You can expect to see new-found fund performance numbers worth bragging about again.
It’s just one more reason to focus less on past performance.
That Ceiling Thing…Again
Once again the Debt Ceiling is an issue. As usual the bickering is getting louder in Washington as we close in on what will, again, be a last-minute fix.
For those who’ve been hiding under a rock the past few years, the debt ceiling is the most the government can borrow to pay its already outstanding financial obligations. This is often confused (by some in Congress) with borrowing money to pay for new things. Those obligations that need to be paid for were already approved by Congress.
This silliness is bordering on absurd. Basically, Congress passes a bunch of stuff that requires money, but now they don’t want to write the check because they have to borrow more to pay for it. Seems like a cart before the horse problem. A shortsighted issue Washington has been great at since forever.
Of course, the bills don’t disappear when the ceiling isn’t raised. Instead the government defaults on its debt and some cataclysmic event occurs, the likes of which we have never seen. Or will ever see, because Congress will raise the debt limit at the last-minute and we’ll deal with it again in December.
Seriously, December, that’s 2 months, if the current bill floating through Congress is passed sans the defunding Obamacare stuff (who knew shutting down the government was the key to killing health care reform). Anyone else feel this Congress crying wolf thing is wearing thin?
Last Call
- Crazy Talk – ‘Buy and Hold is Dead’ – a reason why extremes affect our view of investment strategies.
- The 20 Smartest Things Jeff Bezos Has Ever Said – great insight from one of the most successful CEO’s of the internet age.
- The Importance of Dividend Yields and Earnings Growth to Stock Returns – just a couple of keys to successful long-term investing.
- Surefire Candidates for Mutual Fund Hall of Silly – or a reason to avoid the weird, unusual, or fad funds.
- How Wal-Mart’s Waltons Maintain Their Billionaire Fortune – a look into how the Walton family used the tax code to their advantage.