On Coronavirus: Markets Did What Markets Do

By Glenn J. Downing, MBA, CFP®

Last week we saw the Dow formally enter correction territory, meaning the market dropped by more than 10%.  This is what markets do:  they go up, until the herd feels like its time to take some profit off the table and sell, and then they go down.  And then back up again.

This correction is not like others we’ve seen – it was/is driven by a specific fear, namely the Coronavirus’ effect on world economies. 

What do we know abount Coronavirus? 

COVID-19, as it is formally known, has now shown up in Florida.  As I write this, there have been 2 U.S. deaths.  These have occurred in vulnerable, sickly people.  From the CDC website, the symptoms are mild to severe respiratory illness, with fever, cough, and shortness of breath.  Many patients get pneumonia in both lungs.  The statistics coming out of China are unreliable.  It seems that most people who get the virus recover from it....

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Is it DĀTA or DĂTA?

By Glenn J. Downing, MBA, CFP®

I’m here to tell you once and for all.

Yes, I know . . . this is a little off the beaten path for me. 

I usually write about financial topics, given that I’m a professional financial planner.  But occasionally some NIGO aspect of the world (that’s Not in Good Order, in my professional parlance) comes to my notice with such frequency that I just can’t take it anymore.  Sort of like the crescendo in Lucy in the Sky with Diamonds.  It builds and builds, and you know that a climax is coming. 

Well, today it peaked, and I’m compelled with great generosity of spirit (and indeed, humility) to set the English-speaking world right. 

Ready?  Here it is:  data is the plural of the singular datum.  There is your pronunciation:  dāta with a long a.  Not dăta with a short a.  Never ever EVER. 

Now that that’s settled, let’s turn our attention to the verb...

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Asset Bubbles

By Glenn J. Downing, CFP®

I’m sure you’ve heard the term before:  asset bubble.  Sounds ominous, because a bubble is generally something that’s going to pop.  On the other hand, I think of bubbles with champagne.  So there are two images, both conjuring up a party that has to end at some time. 

What does the term refer to in terms of market valuations?  It means simply that at some point assets will be trading at a price that’s too high, and that the price will come down – maybe gradually, or maybe by a pop.  Why is there so much in the financial literature today about asset bubbles?  Because there appears to be a big asset bubble in the making.

Before I go on, let me define two terms: 

  • A market correction is a situation in which prices of assets traded generally decrease. Markets move up and down all day, so movement is the normal.  But a decrease of, say, 10% is not a common occurrence over the...
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Investing for Millennials

Investing for Millennials is an important topic for a generation set to inherit a massive amount of wealth over the next few decades. Millennials will likely inherit $30 trillion from boomers over the next 30 years[1]. While the stock market is volatile, it continues to rise and break new highs. The questions for Millennials are, “When is the right time to invest? Where do I start?”

Investing for Millennials – three keys to keep in mind
Market timing is a losing formula
When it comes to investing for Millennials we tell them, “You cannot time markets.” This is very important. Waiting for the right time to buy or sell is the realm of day traders. In other words, if you think you’ll get ahead by picking the right day to start investing, chances are there will always be a better day. Certain investments are attractive because of brand popularity or hype, but are often bad investment choices for the investor. It is a big temptation to “time”...

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Your Portfolio: Good Servant; Poor Master

Having great investment portfolio returns may not get you to your retirement goals. You could have (in theory) spectacular returns every year for 20 years and still not realize the retirement you want. Do we like strong investment performance? Sure. Should stellar performance be your goal? Not necessarily. Goals-based investing should be the approach. The investor starts from the endpoint and works backward toward today.

What is goals-based investing?
In doing retirement planning, first begin with the lifestyle you want to enjoy. Then figure out how much it’ll cost you. Then evaluate your current investments to see if they’ll do the job. Your portfolio return in this approach becomes the means, not the end. In other words, start with your goals, figure out how much it’s going to cost you, and determine how you should invest to accomplish those goals.

This approach is very different from performance-based investing, where you pick the top performing fund or funds for...

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