Category: General Education

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Investing Is So Simple. Just Do This.

Load up on stocks when they’re cheap. Reduce stocks when they’re expensive. It’s really quite simple.

Valuations tell us how expensive or cheap stocks may be, but beware! There are many different measures of valuation so it’s important to focus only on those that are highly correlated to future returns.

Below is a chart showing one measure of market valuations going back to 1900. This particular valuation metric is called the Shiller Price / Earnings Ratio, or “Shiller PE” for short. The Shiller PE has about a 90% correlation with future 10-year returns. That’s a very respectable correlation and indicates reliability.

Notice the peaks and valleys? I was curious to know how the market performed following various extremes over time to see if the Shiller PE provides useful information. So I performed a brief study. Check out the results…

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Continue reading “Investing Is So Simple. Just Do This.”

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Letter to Clients

This is the letter I sent to clients this morning.

I know I’ve been communicating a lot recently, but the biggest complaint investors consistently have about their advisors is lack of attention, inaccessible, unresponsive and not proactive.

My promise to my clients is communication, transparency, responsiveness, and to be proactive.

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A Strategy to Protect Gains, Defer Taxes, Participate In Market Upside and Collect Dividends

We’re almost nine years into this bull market. This means many of us own investments with significant unrealized gains, and we’d like to protect those profits.

One way to protect our profits is to sell the investment. Simple enough. But selling forces us to realize and pay taxes on all those gains. Besides, maybe we still like the stock for a variety of reasons and want to continue owning it. So selling may not be a great solution, but there is a strategy that can accomplish all our goals. Continue reading “A Strategy to Protect Gains, Defer Taxes, Participate In Market Upside and Collect Dividends”

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If you’re investing with a broker, bank, or insurance company run as fast as you can

I’ve often discussed the differences between the commissioned model embraced by brokers, banks, and insurance companies and the fee-only model of independent registered investment advisors (RIAs).

Besides obvious differences in compensation structure, independent, fee-only RIAs are also held to the fiduciary standard. If you want perhaps a more helpful and colorful explanation of the fiduciary standard, I suggest you check out entertainer John Oliver’s segment on the topic.

Continue reading “If you’re investing with a broker, bank, or insurance company run as fast as you can”