z - Cover Image: Historical Returns for Stocks, Bonds & Cash Back to 1928

Historical Returns for Stocks, Bonds & Cash Back to 1928

An analysis for historical data to help keep markets in perspective.

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z - Cover Image: Reframing Volatility

Reframing Volatility

If you view volatility as a fee for admission to long-term returns instead of a fine for doing something wrong, you have a better chance of riding it out when the going gets tough.

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z - Cover Image: Are You Investing or Merely Speculating?

Are You Investing or Merely Speculating?

The next time the stock market has a large decline, check your emotions. Are you excited or nervous? The answer will tell you if you are investing or merely speculating.

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z - Cover Image: Updating My Favorite Performance Chart for 2021

Updating My Favorite Performance Chart for 2021

Being diversified means always investing in both the best and worst performers, but never having the best or worst performance in your portfolio. I guess that’s the biggest takeaway I get from updating this chart every year.

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z - Cover Image: 10 Lessons From 2021

10 Lessons from 2021

Lessons are timeless, but annual observations are ephemeral. Markets are a game where the rules are constantly changing.

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z - Cover Image: Betting Against Buffet

Betting Against Buffett

Investing is about the future, not the past. The fact that alternative investments have lagged the S&P 500 by such a large amount is precisely what makes them a more valuable diversifier in a portfolio today.

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z - Cover Image: 6-Chart Saturday (12/11/21)

6-Chart Saturday (12/11/21)

Six charts that tell an interesting story in markets and investing.

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z - Cover Image: Expected Returns Over the Next Decade

Expected Returns Over the Next Decade

Markets are hard to predict. Set expectations for the future based on some combination of the present situation, historical market data and some guesstimates about the future. No one is good enough to reliably and accurately align the past, present, and future of the markets, but this exercise can be helpful from a financial planning perspective. Everyone should consider a range of outcomes when it comes to their portfolio.

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z - Cover Image: This Bull Market Hasn't Always Been Easy

This Bull Market Hasn't Always Been Easy

We’re all shaped by our experiences and formative years when it comes to how we view the markets. The most harmful mistakes often come from more experienced investors who assume they have the markets all figured out.

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z - Cover Image: Market Cap Rules Everything Around Me

Market Cap Rules Everything Around Me

If you look at the U.S. stock market right now you can see we are roughly 5% off all-time highs. People who are apt to worry will look at these numbers and assume things are worse than they appear if you don’t look under the hood. Here’s another way to look at this — most of the stocks in the index simply don’t matter anymore when market capitalization is the weighting criteria.

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z - Cover Image: How Inflation is Driving the Stock Market

How Inflation Is Driving the Stock Market

There are plenty of reasons growth stocks beat value stocks for more than a decade, but one theory I threw out there was inflation being so low for so long. Historically value stocks have performed better when inflation is higher while growth stocks have done better when inflation is lower. Value stocks have flipped the script. A lot of people were concerned about the impact of rising interest rates on growth stocks but maybe it was inflation that was the bigger risk.

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z - Cover Image: How to Avoid Another Lost Decade

How to Avoid Another Lost Decade

Is there any way an investor back in September 2000 could have avoided the “lost decade” that followed? Yes. By maintaining a diversified portfolio that included asset classes other than U.S. large cap growth equities. There’s a cycle to everything, and having the foresight to understand that and remain diversified in the midst of a mania would prove to be invaluable in the years to come.

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z - Cover Image: Some Thoughts On the Highest Inflation Rate in 30 Years

Some Thoughts on the Highest Inflation Rate in 30 Years

We just got the highest inflation print in the United States since 1990. Regardless of the future path of inflation from here, this is going to be a politically-charged economic data point now. Once it’s in the headlines and at the dinner tables, the cat is out of the bag.

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z - Cover Image: How to Invest Without Knowing the Future

How to Invest Without Knowing the Future

It’s that time of year again. Endless predictions and price targets about where the markets are headed in 2022. There’s a huge audience for this type of content, but is there any value to it? Only if you believe that pundits can accurately predict the future, and their track record on that front is not particularly good. This year serves as yet another example.

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z - Cover Image: Let the Market Worry for You

Let the Market Worry for You

Investors have to constantly fight to stay positive. Actually, let me rephrase that. You don’t have to be positive or negative, you can be both. You can worry about the short term and be optimistic about the long term. When I say you have to constantly fight, what I’m talking about is the never-ending negativity. You can’t give in!

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z - Cover Image: Inflation vs. Stock Market Returns

Inflation vs. Stock Market Returns

Predicting inflation, even in “normal” times, is not easy. If higher inflation is here to stay, it would seem to be a big risk to the stock market. It is possible an inflation scare could spook investors but there’s no clear sign of this from the historical data.

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z - Cover Image: Reaching for Returns

Reaching for Returns

The 40-year decline in interest rates has put investors today in a difficult position. They are forced to either reach for higher returns or accept the reality of lower ones. These options may not be palatable, but they are realistic, and any successful plan needs to be grounded in reality. Confront the world as it is today and be prepared to adapt as it changes tomorrow.

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z - Cover Image: The Consequences of a Market Correction

The Consequences of a Market Correction

Market corrections are going to happen, whether you know the reason or not. It’s not an if, but a when. And, since no one can figure out the when with consistency, the only thing you can do is recalibrate your portfolio or expectations ahead of time.

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z - Cover Image: When Buying the Dip is a Terrible Investment Strategy

Why Buying the Dip Is a Terrible Investment Strategy

The reason why Buy the Dip usually fails is simply because market dips, especially larger dips, are rare. Without dips to buy, Buy the Dip is just an 100% cash strategy, which is a terrible way to invest for the long term. More importantly, while large dips can generate larger returns, predicting them beforehand is near impossible. So be careful before waiting for one because your portfolio is likely to miss out.

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z - Cover Image: A Time for Prudence?

A Time for Prudence?

Prudence may mean increasing diversification, reducing portfolio beta, or simply resisting the urge to chase the latest fad. None of this caution may seem necessary today, and may not be in the future. But, on the non-zero chance that it is, a little bit of prudence will go a long way.

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z - Cover Image: Seven Observations on the Market

Seven Observations on the Market

The equity markets in the U.S. have been unusually calm thus far in 2021, with the S&P 500 already posting 52 all-time highs and doing so without a pullback greater than 5% (on a closing basis). Investors should not view this as a sign that risk has been eradicated. There’s always risk lurking beneath the surface; you just don’t always see it.

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z - Cover Image: Are We In a Melt-Up?

Are We in a Melt-Up?

Of all the things that you should do during a melt-up, the most important is to get invested.

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z - Cover Image: A Very Good Year in the Stock Market

A Very Good Year in the Stock Market

Volatility is basically non-existent this year. Not only have there now been 50 new all-time highs through the close on 8/23, but just three days in which the S&P 500 was down by 2% or worse. In contrast, last year saw 25 down days of 2% or worse. That includes the 16 days with losses of 3% or worse. The worst daily loss in 2021 is just 2.6%.

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z - Cover Image: Are Emerging Markets Turning into the S&P 500?

Are Emerging Markets Turning into the S&P 500® Index?

Emerging markets are starting to look more like the S&P 500® Index over time. Eventually, that should be a good thing for investors in these volatile markets

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z - Cover Image: 2021: The Half Year in Charts

2021: The Half Year in Charts

These are the charts and themes that told the story of the first half of 2021. As always, the narratives followed prices. As prices change in the back half of the year, the narratives will change as well.

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z - Cover Image: The Long and Winding Road to Wealth

The Long and Winding Road to Wealth

As children, we’re taught that the shortest distance between two points is a straight line. Many expect investing to be the same, with high and consistent returns bringing you from point A (starting out) to point B (wealth). But markets don’t operate in the same realm as the physical world. There is no straight line when it comes to risky investments. Instead, the road to wealth is a long and winding one – two steps forward, one step back – repeated indefinitely.

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z - Cover Image: Home Bias and the Best Time to Diversify

Home Bias and the Best Time to Diversify

The question for U.S. investors today is not whether home bias has helped. It most certainly has. The question is whether it will continue to help going forward. And because no one knows the answer to that question (we can’t predict the future), we need to diversify to protect ourselves from the unknown.

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z - Cover Image: Demystifying High Yield Bonds

Demystifying High Yield Bonds

S&P 500 valuations are at their most elevated level in history with the exception of the dot-com bubble. It wouldn’t be unreasonable for investors with a lower risk tolerance to be seeking out lower beta options in preparation for more difficult years ahead. High yield bonds have proven to be one such option over the past 35 years.

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z - Cover Image: What Can You Do ABout High Valuations?

What Can You Do About High Valuations

Historically, the best protection against a bubble or elevated valuations in a single asset class is to have exposure to other asset classes and strategies that do not have the same underlying fundamental drivers. This is ultimately an exercise in humility and risk management. Diversification, at its core, is an admission that you cannot predict the future and is employed to protect oneself from the many possible outcomes that lie ahead.

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z - Cover Image: The Most Important Rule in Investing

The Most Important Rule in Investing

Knowing what you own and why you own it may be the most important rule, but it’s just the beginning of the investing journey, not the end. Once you understand the “what” and “why” the hard work begins.

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z - Cover Image: The Great Reversal in Secular Trends

The Great Reversal in Secular Trends

When secular trends reverse, no bell is rung, and no one can believe that a shift has actually occurred.

But as narratives follow prices, the longer they are sustained, the more the story changes and the more people believe it. In January, there were few believers in a change to the status quo. Today, as the great reversals have continued, there are more believers.

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z - Cover Image: Is Diversification Finally Working?

Is Diversification Finally Working?

Spreading your money across a wide range of investments, asset classes, and geographies is the ultimate form of saying, “I have no idea what’s going to happen in the future.”

For those of us who cannot predict the future, we diversify.

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z - Cover Image: It's Not Different This Time

It's Not Different This Time

A reminder that it feels like this every time. Every time stocks fall a little, it feels like they’re going to fall a lot.

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z - Cover Image: What If Interest Rates Don't Matter As Much As We Think?

What if Interest Rates Don’t Matter as Much as We Think?

Interest rate levels, in and of themselves, aren’t the sole cause of every market movement. They are just one factor among many that impact how people allocate their assets.
And maybe, just maybe, they don’t matter as much as we all think.

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z - Cover Image: Is this 1929 or 1998?

Is This 1929 or 1998?

An objective observer will note that the risk/reward in U.S. equities is less favorable today than it has been in quite some time. That says nothing about what will happen tomorrow, but if the price one pays for something still matters, it will be a factor weighing on returns for years to come.

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z - Cover Image: Investors Need To Be Comfortable with Volatility

Investors Need to Become More Comfortable with Volatility in Their Portfolios

The stock market has been all over the map this year. And, while 2020 is an outlier in terms of the wild ups and downs, volatility is something every investor is going to have to get used to in the coming years. You simply have to be willing to accept some form of volatility if you would like to earn anything on your capital.Volatility has always been part of the markets, but more so now than at any other time in history because interest rates are on the floor.

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1,000 Words Tab

A picture is worth a thousand words. In each issue, we present one insight on a range of market, investment strategy, and behavioral topics. The 1000 Words Series is designed to provoke insightful and memorable conversations.
z - Cover Image: 1,000 Words - Odds Are

1,000 Words - Odds Are

Trying to pick the best times to be in the market and when to be out is known as market timing. Unfortunately, trying to time the market to miss the lows means missing the highs too.

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z - Cover Image: 1,000 Words - The Shape of Markets

1,000 Words - The Shape of Markets

Bull markets tend to climb slowly over time, while bear markets drop abruptly without warning, often causing extreme volatility.

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z - Cover Image: 1,000 Words - The Silent Spoiler

1,000 Words - The Silent Spoiler

Inflation erodes your purchasing power slowly, but surely, even when the figures are small.

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z - Cover Image: The Upside of Lower Downside

The Upside of Lower Downside

Investing may be simple, but it isn’t easy. We’re told to buy equities and hold them through good markets and bad. But few of us have the fortitude to calmly stay fully invested when prices are declining. When it comes to investing, your best offense is a great defense.

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z - Cover Image: Minds Over Markets: A Behavioral Guide to Investing

Minds Over Markets

This guide strives to help you achieve better long-term financial outcomes. Its main message is that doing so is more about setting the right goals and controlling your own behavior than it is “beating the market.” We provide plenty of historical perspective on markets, but only in the service of confronting our natural tendencies to make poor decisions about money.

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z - Cover Image: What's Your Number?

What's Your Number?

There are four steps to calculating your "retirement number" - the number of dollars you most probably need as a sum of capital from which to draw a lifestyle-sustaining income without serious danger of running through the capital.

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z - Cover Image: The Active Investor's Field Guide

The Active Investor's Field Guide

Recent financial innovations have created both a wealth of opportunity and an avalanche of complexity for investors. It has never been easier—or more overwhelming—to take investment risk. With complexity comes the need for simplification. How do investors cut through the noise and take control of their portfolios? This guide offers perspective on the so-called active and passive investing debate, with an eye toward prioritizing diversification, risk management, and investor behavior.

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Market leadership changes from year to year and predicting the winning style is impossible. These tables highlight the importance of diversification.
Elements of Diversification - Sector Image

Elements of Diversification - Sectors

Sector leadership changes year after year — but it’s not possible to predict future winners.
Diversification is the answer.

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Elements of Diversification - Asset Classes Image

Elements of Diversification - Asset Classes

Asset class leadership changes year after year— but it’s not possible to predict future winners.
Diversification is the answer.

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Elements of Diversification - Country Image

Elements of Diversification - Countries

Country leadership changes year after year — but it’s not possible to predict future winners.
Diversification is the answer.

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