How a Fed Rate Hike Affects Stocks

The hints of a Fed rate hike have been fairly constant since before the year started. The earliest guesses wrongly put the hike in June. Some have said September. The reality is nobody knows. It’s that uncertainty that gets people worrying about how it will impact their portfolio.

The funny part about all this is people have complained about low rates for six years. Now people are worried about getting what they wanted. But at what cost? Continue Reading…

Investing Comes With Baggage

Every investment has the potential to offer you something – better returns, diversification, less volatility, more security – but most investors overlook the baggage that tags along.

I’m not talking about the stuff you carry on a plane. These are pre-existing problems you don’t find out about until much later in the relationship.

Simply, there’s always a tradeoff that must be weighed with every investment decision.

Most investors focus on the potentially good outcome while overlooking the bad possibilities and problems. The pros are why you invest. The cons, warts and all, that cause mistakes and bad behavior are often overlooked or ignored. Continue Reading…

Predicting Bond Returns For The Next Decade

Two questions being asked right now about bonds is when will interest rates rise and how will it affect bond performance? Of course, these questions aren’t unique to today. Investors always ask about interest rates and the potential impact to bond returns.

There’s just one tiny problem. Nobody knows how far, how fast, or even when interest rates will move. Predicting the markets is fruitless in the short term.

That doesn’t mean you can’t come up with a realistic expectation for future bond returns. Continue Reading…

10 Lessons Learned From Nick Murray

Nick Murray QuoteI finally got around to reading Simple Wealth, Inevitable Wealth by Nick Murray after seeing it mentioned several times online. You might be able to find a used past edition on Amazon, but your best bet is to buy it new from Nick Murray’s site (the book deserves a much broader reach).

For non-finance folks, the book should be refreshing. Murray dispenses with the financial-ese and puts things into simple, common sense terms that anyone can understand and focuses on the timeless ideas that matter.

I dug through all my notes and picked out ten lessons from the book. Continue Reading…

(Mis)Managed Expectations

A big mistake investors make is expecting more than what’s possible in the time allowed. In other words, they expect too much or too little in too short a time. The internet boom was built on this. The housing bubble was too.

But this condition isn’t specific to bubbles. Rather, two bubbles in 10 years raised our expectation of asset bubbles. Now we’re constantly looking for bubbles.

Which gets me to my point. Continue Reading…