The Asset Must Match The Liability!

I have a multiple choice question for you:

You have some cash sitting in your bank account. You’re buying a house in 12 months and want to put 20% down so you’ll need the cash in a year. What should you do with the cash in the interim?

  1. Buy stocks. After all, stocks are up “yuge” over the last 12 months.
  2. Stocks might be a little risky, so invest the cash in bonds instead.
  3. Buy a 1-year CD.
  4. Leave the cash in your savings account.

cue the Jeopardy music….
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What can we learn from Bitcoin?

For those of you that follow Bitcoin, you know it’s had a volatile couple months. In early-June the price of a Bitcoin hit about $3,000 at which point many articles were written about how high it could go, etc… It then fell over $1,000 down to about $1,900. That’s a 35% drop in about 1 month (see chart below) before recovering once again. That is not the interesting part….


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Quarterly Market Update – This Has Happened Only Two Other Times Since 1900…

It’s that time again. The time when I review the market’s performance and important metrics for the quarter.

In short, it was a strong quarter for most assets. However, market valuations continue to get stretched to extremes implying the ultimate snapback will need to be that much greater. In fact, valuations have only been this high two other times since 1900. The first time was right before the Great
Depression and the second time was at the Dot-Com Bubble

Therefore, it is reasonable to expect subdued returns over
the next ten years and plan accordingly.

Q2 Market Performance
I’ll just briefly summarize various index returns for the quarter so we can get to more meaningful insights. International stocks continue to be the top performer.


U.S. Stock Market Valuations
Today’s price of a future cash flow determines your return. For instance, if you exchange $50 now to receive $100 in ten years that implies a 100% return. If, however, you exchange $90 today for that same $100 in ten years your return drops to 11%. So price paid today is extremely important in determining future returns.

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