Mar
10
2010
Mar
9
2010
Returns at These ETFs Could Shock You – Part 1 – Morningstar Video
Due to how leveraged and inverse etfs are compounded, volatility can lead to wildly unexpected results at these funds, explains Morningstar ETF analyst Bradley Kay. For more Morningstar videos, please visit: www.morningstar.com
Mar
8
2010
Does Rebalancing Work? It’s Hard to Argue That it Doesn’t!
In a way, rebalancing is a lot like market timing. The big difference is that if done correctly, it will be void of emotion or speculation. Rebalancing has proven to be more efficient than a buy and hold strategy over a full market cycle and by rebalancing periodically back to the original weighting of the portfolio, it has also been effective at risk reduction.
A buy and hold strategy can be more profitable over the short term as rebalancing sole driving force is to sell off what is up and buy what is down. Because of this it is possible to reduce your position in an asset class that is still on the rise thus reducing your potential for short-term gains. Overall, or more precisely, over a full market cycle of (on average) 5-7 years, rebalancing does add value.
As an example, assume you had a portfolio of 50% Canadian Energy Sector Index and 50% Canadian Gold Sector Index. If you had invested $1,000 on January 1st 2002 and done no rebalancing, your portfolio would be worth $2,989 today. On the other hand had you rebalanced the portfolio by placing a 10% tolerance on each asset class (rebalancing back to 50%/50% when any asset class increased or decreases by 10%) your investment would be worth $3,245 today. In this example simply rebalancing back to the original mix as the portfolio goes out of balance over time creates a portfolio with a compounded annual rate of return of 16.80% instead of 15.54%. Remember, the same investments over the same time period.
To understand how and why this works really isn’t complicated. The above example illustrates this very well. As of today, the portfolio that was not rebalanced is roughly 60% energy and 40% gold. This is a big shift from when we started at 50/50, if you’ve had any experience investing over the last 6 years or so, you are probably aware that gold and energy have been battling back and forth as the preferred asset class. Both show high volatility but both have provided some pretty substantial returns. The rebalanced portfolio, as the name would suggest, is currently sitting at 45% energy and 55% gold. What has happened over the test period becomes quite obvious. Without emotion or massive amounts of research your portfolio has been doing what you were taught the first day you learned about investing: Buy low and sell high. As one asset class increase, your portfolio will sell off some of this asset class and buy the underperforming asset class. As pointed out earlier, over a short period of time this may actual reduce returns as the asset class reduced may continue to outperform the other, but over a full market cycle where asset classes change being at the top of the performance charts on an regular basis, buying low and selling high is almost impossible to deny.
Of course one of the major selling features of this strategy has not been discussed yet and this is one of the most important points. By rebalancing you also retain control of the overall risk of a portfolio. As another example, if you had a profile that suggests that you should have 50% bonds and 50% equities, it’s very possible that after a full market cycle without rebalancing, your portfolio could be at 70% equities and 30% bonds. If this is the time when a bear market hits, you have much more exposed to equities than originally planned and you may be facing a decline in the value of your investments that you had hoped to avoid with your original investment mix.
So far we’ve only discussed examples with 2 different asset classes or sectors but the same strategy can and does work with portfolios with many different asset classes, sectors or funds. At portfolio4less.com rebalancing is included as one of the services provided. With your authorization, your portfolio will be monitored for rebalancing and changes made back to the original suggested weighting are done with no charge to the client. Styles change and economics change, and a portfolio with a buy and hold strategy can be effective, but the same portfolio can benefit from a relatively simple process called rebalancing. You owe it to yourself to find out if your portfolio could benefit from rebalancing.
Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the simplified prospectus before investing. Mutual funds are not guaranteed and are not covered by the Canada Deposit Insurance Corporation or by any other government deposit insurer. There can be no assurances that the fund will be able to maintain its net asset value per security at a constant amount or that the full amount of your investment in the fund will be returned to you. Fund values change frequently and past performance may not be repeated.
The foregoing is for general information purposes only and is the opinion of the writer. This information is not intended to provide specific personalized advice including, without limitation, investment, financial, legal, accounting or tax advice.
Mar
7
2010
Authors@Google: David Wessel
David Wessel visits Google’s Mountain View, CA headquarters to present his book “In Fed We Trust: Ben Bernanke’s War on the Great Panic”. This event took place on September 23, 2009, as part of the Authors@Google series. For more than twenty years David Wessel has been The Wall Street Journals insider at the Federal Reserve, the ultimate protector of the financial system on which the entire economy relies. With continual access to its chairmen, governors, policy makers, and staffers, Wessel has an insiders view of the biggest ongoing story of our time. IN FED WE TRUST: Ben Bernankes War on the Great Panic is Wessels authoritative and penetrating account of what Fed chairman Bernanke and his team knew (and when), what took them by surprise, what they were thinking at critical moments as they labored to prevent economic calamity, and more.
Mar
7
2010
Risky VS Safe Investments!!!
Here’s some info. on how to determine if an investment is risky or safe.
http://www.youtube.com/watch?v=EqBK0qaBlcU&hl=en
business card design business web hosting business valuation
Mar
6
2010
Genius advance calculator analysis drive
Test drive an investment at: geniusfunds.shopdsponline.com . INVEST IN ONE OF OUR FUNDS AND RECEIVE UP TO 1.9% DAILY Our funds are investing mainly in highly lucrative equities and bonds, focusing on emerging economies. We offer investment products that provide flexibility, keeping pace with the individual demands of our investors.The Intelligent Power of Investment Competence In today’s complex and dynamic economic environment, being an educated investor is vital to achieving your financial goals. The fast developing technology and the expanding financial globalization boost investment opportunities, bringing them to your doorstep. Today you can invest in a mutual fund in India, in an investment fund in Australia, or buy shares in a textile manufacturing plant in China, without leaving your home.
Mar
6
2010
Market Technical Analysis – Market Gaps…Then Fades As Earnings Beat But Cost Cutting Is The Reason
inthemoneystocks.com breaks out the key technical analysis techniques they have become famous for. They analyze the charts on the market to showcase their technical trend line analysis, price, pattern and time values. By utilizing these methods and not using the common technical tools which almost never work anymore, they are able to call every major and minor market move avoiding Wall Street hype. inthemoneystocks.com looks at major support and resistance levels on the charts telling their viewers where the market will rise and fall. They talk about major rules that must be learned. Enjoy and come get their premium daily, month, weekly and intra day expert guidance on the markets, gold, oil, us$ and stocks in their premium nightly videos, daily market reports, pro trader watch list, hidden gems and technical tactics. All included in the Research Center for just $49.99/month. Best value and guidance on Wall Street by those that avoid the Wall Street hype! realtick graphics used with permission of Townsend Analytics, Ltd. ©1986-2009 Townsend Analytics, Ltd. All Rights Reserved. realtick is a registered trademark of Townsend Analytics, Ltd.
Mar
5
2010
Adam Bold – Back to Basics: Rebuilding Your Personal Wealth
June 17th, 2009. Mutual Funds and Why They are Still the Best Investment – Adam Bold in the Polsky Theatre at JCCC. This is part of the Polsky Personal Enrichment Series. Close Captioned
Mar
5
2010
Brain-dead Mutual Fund Selection
About this time every year, the personal finance magazines will perform an annual ritual: Looking at how mutual funds have performed over the past year–and then using that information to suggest which mutual funds you should pick for the coming year. Sadly, this work is a complete waste of time.
It’s (mostly)the class, stupid
Choosing a mutual fund, all the research data show, is actually very straightforward and simple. Most of your performance depends on the asset class you select. In other words, the biggest, most important, and most significant decision you make is whether you want to put money into stocks, bonds, money market accounts, real estate, or some other class, such as international stocks.
Cost is the second factor to consider
Within a given class of investments, such as stocks, the research shows that the most significant characteristic that determines the goodness of the investment is the expense ratio charged by the mutual fund management company. For example, if one mutual fund company charges you 2 percent of your fund balance to manage your investments and another company charges you .2 of a percent, almost invariably, the mutual fund charging the lower expense ratio will do better over long periods of time.
Asset allocation for lazy people
When you understand the importance of asset allocation and investment costs, picking a mutual fund boils down to two simple issues. The first issue is how you want to apportion your money between stocks, bonds, and other investments.
Typically, you want to have the majority of your long-term investment money in stocks, some portion in bonds to reduce the volatility of your investment portfolio, and some portion of your money–perhaps your rainy day fund–in something like a money market account.
The second issue you need to focus on in selecting a mutual fund is the expense ratio. Fortunately, the Internet and Money’s hyperlinks let you rather easily get to mutual fund prospectuses, and these materials provide expense ratio information. This is where you want to start–and probably finish–your mutual fund investing. You almost can’t win if you choose a mutual fund with a very high expense ratio. You almost can’t lose if you choose a mutual fund with a very low expense ratio.
Why not try to beat the market?
Let me also briefly address the issue of finding a mutual fund manager who generates above average returns. Clearly, some mutual fund managers, over time, have produced extraordinary returns–returns so high that they more than offset even large expense ratios. The point you need to realize, however, is that if you do choose to look for a star mutual fund performer, what you need to do right now is identify somebody who is going to be a star over the next two or three decades, not someone who has been a star over the past two or three decades. Long-term investing means you are looking out several decades into the future–even if you are retired.
Note, too, that who performed well last year is no indication of who is going to perform this year. Repeatedly, studies have shown that last year’s or last quarter’s hot performer is not this year’s or this quarter’s hot performer.
Putting my money where my mouth is
Here’s my personal investment strategy. I am a firm believer in index funds. From the mid 1908s and through the late 1990s, I invested almost my entire portfolio (perhaps 95 percent or more) in the widest available stock index fund available to me. In the late 1990s, after the stock market became obviously over-valued (I said this in print in books like the Million Kit (Random House, 1999), I began using balanced index funds (which index both stocks and bonds).