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Posted by in News

Where to Put Your Investments
Part 1:  The Investor’s Dilemma

May 4, 2016

By:  J. André Weisbrod

SUMMARY

  • Global economies are shaky with some bright spots, but with many problem economies.

  • The U.S. economy is sluggish, though still growing.

  • Interest rates are near historical lows and will probably rise over the coming years.

  • Inflation has increased in spite of low gas prices.  Inflation and interest rates are generally linked over long periods of time.

  • Rising interest rates cause the value of bonds to go down.  A rise of 2 percentage points could result in longer term bonds losing as much as 20% of their value.  That is stock market kind of risk.

  • There are few places to place investments that have a good probability of offering a “real return” above inflation and taxes over the next 10 years.

  • This fact has helped support the stock and real estate markets.  Other than companies and real estate, there is nowhere else to put your money that can make you a real return.

  • However, stock markets are looking shaky and showing signs of another retreat after recovering from the early 2016 drop.  Values have risen and now earnings and revenues appear to be slowing.

  • Long term, it is unlikely that you will make a sufficient real return above inflation and taxes unless you have a significant portion of your investment capital in stocks and real estate.

  • Therefore your stock and real estate allocations and the management of them are critical.

Consider a retiree’s challenge.  If inflation

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Posted by in News

2015 - The Investment Year in Review

January 8, 2016

By: J. André Weisbrod

SUMMARY POINTS:

·         2015 was a disappointing year, ending with a whimper.   Santa failed to show up.

·         2015 saw high volatility.

·         Except for large consumer companies, no major category experienced close to an average long-term return, though a few were modestly positive.  Most categories were well under average and over half were down for the year.

·         The best major sectors of the S&P 500 were Consumer, Health Care, Technology and Telecomm while the worst were Energy, Materials, Utilities and Industrials. 

·         Overall the S&P 500 was up 1.3%, but an equal-weighted S&P 500 actual lost 2.2%. 

·         Of interest is that equal weight indexes, which have generally outperformed the more quoted capital weight indexes over the past 15 years, mostly underperformed the capital weighted indexes the past couple years.  The equal weight S&P 500 returned -2.2% (3.5% less than the capital weighted index) in 2015.  We must remember that indexes do not have expenses.  This explains at least in part why professional managers have had trouble meeting or beating the S&P 500 the last couple years.  (See discussion and tables.)

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