To many, the mark of the beginning of the financial crisis was on March 16, 2008 when Bear Stearns was sold to Chase at a fire-sale price. The Dow Jones closed that day at 11,951.09 and continued to charge downward for the next year. As I write this, the Dow Jones is at 12,821.25. I…
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A very difficult area of scientific prediction is that of fluid dynamics. Or, the science of predicting how a fluid (which could be liquid or a gas) will react to various forces. An example is the weather and weather prediction. There are a myriad of things that affect how the weather will be, what direction…
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Homeownership has often been called the epitome of the American Dream. When I bought my first house at the ripe old age of 23 I remember going to it after the closing and quietly walking around the yard telling myself, “This is my land, it’s my land.” In the previous decade there were a lot…
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For years, analysts have been predicting the collapse of the 30 year bond rally. Since 1982, bond prices have generally be rising at a rate without near-term historical precedent. In early 2009, it was widely thought that it was the end of the bond price rally as Treasury rates were pushed to historical lows (yields…
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Today, as I write this at 10:30am Denver time, the stock market is in hefty selloff. However, truth be told, the past few years it has been normal to see the S&P 500 move more than 1% in a day. With each decline we all wonder if this is the first decline off the recent…
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When investing in municipal bonds, it’s important to keep in mind that the yields are generally not an across the board comparison to CD yields or US Treasury yields. Let’s go through how each investment is taxed: CD Yields = Taxable at both the state and federal level US Treasury Yields = Taxable at the…
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With investing, it’s always important to get an apples for apples comparison so that everything is on a levelized playing field. Most of the time we look at interest rates and yield before taxes are taken out of them. If you open up a newspaper and see an advertised CD rate at 2.00% this is…
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Halley’s Comet visits earth every 76 years. For the average person, this is a once in a life time event. Right now there is an event in the financial world that hasn’t happened since 1861 just over 150 years ago. In 2011, we completed a thirty year period in which bonds outperformed stocks. This is…
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When you look up an investment, often it’s published with the six risk statistics: Alpha, Beta, Mean Annual Return (or just “Mean”), Standard Deviation, Sharpe Ratio, and R-Squared. It’s important to look at both performance and risk. If you see an investment that outperformed the S&P 500, it can be easy to get excited, but…
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Recently there was a special on TV about the various meteors that NASA has tracked. You may be relieved to know that all the major asteroids have been identified and we should not expect a large collision in the next few decades. The question was then posed, “If there was a large Armageddon-like asteroid heading…
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I love to talk about longevity. I think it’s very fascinating to think about and crucial for me to help people plan for. For ages. humans have scrambled to avert their own mortality. Whether it was the Fountain of Youth or the Holy Grail people have sacrificed their lives to extend them. If you asked…
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Recently the Dow Jones Industrial Average has made headlines as it crossed the 13,000 mark for the first time since 2008. It crossed 13,000 for the first time in April 2007 on its way up, again in January 2008 on its way down, touched above it in May 2008 (in a post Bear Stearns false…
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Tonight at my son’s Cub Scout meeting they had a reptile expert come show his various reptiles that they’ve rescued. He talked about how a big problem is that people buying reptiles don’t take into consideration how long they can live. Snakes can live beyond 20 years, alligators 70 years and tortoises for 200 years.…
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In full disclosure, I am a financial advisor and for objectivity’s sake I’m going to pretend for a moment that I’m terminally ill and this is the advice that I’m giving to my existing clients on choosing someone other than me. First of all, I think that you have to decipher fees versus costs. Yes,…
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A constant goal that I have is to educate clients. My hope is that when clients hear terms in the media or in casual conversation that they could have some understanding of what is being discussed. The other day a client asked me what a “price per earnings ratio” was (otherwise known as a “P/E…
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Most of us know the heads of these organizations: Ben Bernanke as the Chairman of the Federal Reserve (Alan Greenspan being his predecessor) and Timothy Geithner as the Secretary of the Treasury (Henry “Hank” Paulson being his predecessor). But it’s not always obvious how each of them is functioning. The US Treasury Department can be…
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As I write this, the Dow and S&P 500 just closed out about on another post-Financial Crisis peak (if you can pretend for a second that the Financial Crisis is over). The S&P 500 needs another 14.61% and the Dow needs another 8.7% and each will be setting all time record prices. Not only that,…
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Last year, the US Bureau of Labor Statistics reported that inflation was 3%, but many of us feel that things have gotten far more expensive. I feel that there are three reasons for this: 1. Perception – From a psychological standpoint, you’re going to emotionally register a price increase (i.e. as “pain”) with a stronger…
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The way the media reports day to day bond market activity can be confusing. The reason is that they can either choose to focus on price or yield to convey what they did that day. One reporter may say “prices on bonds rose today” and another may say “yields on bonds fell today” and they…
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Boomers are in a tough spot. They’ve had two of the most severe stock market declines in the past 80 years and now they are in an investing environment with fixed income rates (such as on CDs or savings bonds) that haven’t been this low in their lifetimes. To make matters worse, inflation has been…
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Retirement is one of the hardest life events to plan for financially. Because there are so many variables that cannot be predicted, many people find that predicting the proper amount of money that they need to save is next to impossible. There are several different methods to determining a good amount of money that needs…
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Frequently I hear these terms used interchangeably, but they are two distinct concepts seeking to solve the same problem. Investing efficiently and effectively is not about randomly picking stocks and bonds because of the possibility of earning a high return, but creating an investment strategy that places you in a position to potentially earn the…
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Many of you may recognize this as a quote from Linus in A Charlie Brown Christmas. The investing world seems to keep getting more and more Charlie Browny all the time. As I write this, treasury bond prices are at 45-year highs … ahem, highs. You don’t want this on anything if you’ve just purchased…
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I see financial advising as a mix of many skills. Sometimes it’s that of investor psychologist, but in the nuts and bolts of it I’m a risk manager. A topic I give a lot of thought is, “How long will my clients live?” My biggest goal for my clients is that they never run out…
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Yesterday was history beyond the headlines as investors worldwide ran fearfully into 10 Year US Treasury Bonds, it pushed the yield to their lowest point ever at 1.907%. Or to state it another way, the price for yield are roughly at the most expensive place that they’ve been ever. My question to readers is when…
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