Cash-value life insurance isn’t an investment, it’s a religion—and you’ll never meet a more prickly group of disciples.
MICHAEL BURRY waited years to be rewarded for his bet against subprime mortgages. Actor Christian Bale, in the movie version of Michael Lewis’s book, The Big Short, portrays Burry curled up in the fetal position on the floor of his office. When the financial crisis finally hit in 2008, he made $100 million.
I’m no Michael Burry and the chance I’ll ever see $100 million is about 100 million to one.
PRESIDENT TRUMP recently criticized the Federal Reserve—yet again. Calling Fed Chair Jerome Powell and his colleagues “boneheads,” the president expressed frustration that they haven’t done more to lower interest rates. Specifically, the president said we should, “get our interest rates down to ZERO, or less.” That last part—“or less”—was key. Not only should rates be lower, he argued, but they should be below zero, as they have been in Europe.
Last week, the Fed did indeed cut short-term interest rates—by 0.25 percentage point.
PAST PERFORMANCE is no guarantee of future results. But we keep hoping.
Over the 10 years through August 2009, the large-cap stocks in the S&P 500 shed an average 0.8% a year, even with dividends included. Meanwhile, U.S. value stocks beat U.S growth stocks, smaller-cap U.S. shares notched 5.5% a year, developed foreign stock markets 2.7% and emerging markets 10.4%.
Fast forward one decade, and the leaders have become laggards and vice versa. Over the 10 years through August 2019,
OVER 600 YEARS ago, Geoffrey Chaucer gave the world The Canterbury Tales, a caustic look at a cross-section of English society. While all the stories are still worth reading, one tale is especially relevant to today’s consumer.
For those who don’t remember The Canterbury Tales, it’s a story about a group of pilgrims traveling from London to Canterbury. They pass the time on the road by having a contest to see who can tell the best tale.
A DECADE AGO, a large financial firm ran a clever advertising campaign that showed people going about their everyday lives carrying a bright orange six- or seven-figure sum that represented their number—how much money they needed to retire. It was clever because we humans like to simplify—and sometimes oversimplify—complicated issues. It’s one of our cognitive biases.
I spent almost 40 years in aerospace engineering. I did a lot of detailed engineering analyses, calculating expected performance numbers,
COLLEGE STUDENTS who borrow graduate with an average $37,000 in loans. While many people believe loans are the only way to finance a college education, that’s simply not the case. Here are five ways to get an advanced education while minimizing debt:
1. Stay close to home. Sure, it’s fun to think about moving across the country to go to school. But staying close to home after high school comes with several benefits.
WHAT PERCENTAGE of U.S. adults own shares, either directly or through funds? A 2019 Gallup poll found that 55% said they’re invested in stocks, down from 63% in 2004 but up from 52% in 2013.
NO. 44: WE SHOULD view our debts as negative bonds. Instead of earning interest, we’re paying it. Tempted to buy bonds? First, we should see if we can earn more by paying down debt.
NO. 115: HOMES aren’t as safe an investment as they feel. A house is a big, undiversified and often leveraged investment bet. Yet owning a home seems less unnerving than owning stocks—because we don’t get constant price updates. The same illusion holds for other infrequently valued investments, like hedge funds, timber and private equity.
LOOK FOR TAX savings—by reviewing your recent tax returns. Two danger signs: lots of interest income and realized capital gains, especially short-term capital gains. What to do? Avoid trading so much or, if necessary, confine it to a retirement account. Also use a retirement account to hold taxable bonds and other tax-inefficient investments.
SHILLER P/E. Named after economist Robert Shiller, the Shiller price-earnings ratio—also known as the cyclically adjusted P/E ratio or CAPE—compares current stock prices to average inflation-adjusted earnings for the past 10 years. That smooths out cyclical fluctuations in corporate profits—a problem that can distort conventional P/E multiples.
MICHAEL BURRY waited years to be rewarded for his bet against subprime mortgages. Actor Christian Bale, in the movie version of Michael Lewis’s book, The Big Short, portrays Burry curled up in the fetal position on the floor of his office. When the financial crisis finally hit in 2008, he made $100 million.
I’m no Michael Burry and the chance I’ll ever see $100 million is about 100 million to one.
PRESIDENT TRUMP recently criticized the Federal Reserve—yet again. Calling Fed Chair Jerome Powell and his colleagues “boneheads,” the president expressed frustration that they haven’t done more to lower interest rates. Specifically, the president said we should, “get our interest rates down to ZERO, or less.” That last part—“or less”—was key. Not only should rates be lower, he argued, but they should be below zero, as they have been in Europe.
Last week, the Fed did indeed cut short-term interest rates—by 0.25 percentage point.
PAST PERFORMANCE is no guarantee of future results. But we keep hoping.
Over the 10 years through August 2009, the large-cap stocks in the S&P 500 shed an average 0.8% a year, even with dividends included. Meanwhile, U.S. value stocks beat U.S growth stocks, smaller-cap U.S. shares notched 5.5% a year, developed foreign stock markets 2.7% and emerging markets 10.4%.
Fast forward one decade, and the leaders have become laggards and vice versa. Over the 10 years through August 2019,
OVER 600 YEARS ago, Geoffrey Chaucer gave the world The Canterbury Tales, a caustic look at a cross-section of English society. While all the stories are still worth reading, one tale is especially relevant to today’s consumer.
For those who don’t remember The Canterbury Tales, it’s a story about a group of pilgrims traveling from London to Canterbury. They pass the time on the road by having a contest to see who can tell the best tale.
A DECADE AGO, a large financial firm ran a clever advertising campaign that showed people going about their everyday lives carrying a bright orange six- or seven-figure sum that represented their number—how much money they needed to retire. It was clever because we humans like to simplify—and sometimes oversimplify—complicated issues. It’s one of our cognitive biases.
I spent almost 40 years in aerospace engineering. I did a lot of detailed engineering analyses, calculating expected performance numbers,
COLLEGE STUDENTS who borrow graduate with an average $37,000 in loans. While many people believe loans are the only way to finance a college education, that’s simply not the case. Here are five ways to get an advanced education while minimizing debt:
1. Stay close to home. Sure, it’s fun to think about moving across the country to go to school. But staying close to home after high school comes with several benefits.
WHAT PERCENTAGE of U.S. adults own shares, either directly or through funds? A 2019 Gallup poll found that 55% said they’re invested in stocks, down from 63% in 2004 but up from 52% in 2013.
NO. 44: WE SHOULD view our debts as negative bonds. Instead of earning interest, we’re paying it. Tempted to buy bonds? First, we should see if we can earn more by paying down debt.
LOOK FOR TAX savings—by reviewing your recent tax returns. Two danger signs: lots of interest income and realized capital gains, especially short-term capital gains. What to do? Avoid trading so much or, if necessary, confine it to a retirement account. Also use a retirement account to hold taxable bonds and other tax-inefficient investments.
NO. 115: HOMES aren’t as safe an investment as they feel. A house is a big, undiversified and often leveraged investment bet. Yet owning a home seems less unnerving than owning stocks—because we don’t get constant price updates. The same illusion holds for other infrequently valued investments, like hedge funds, timber and private equity.
SHILLER P/E. Named after economist Robert Shiller, the Shiller price-earnings ratio—also known as the cyclically adjusted P/E ratio or CAPE—compares current stock prices to average inflation-adjusted earnings for the past 10 years. That smooths out cyclical fluctuations in corporate profits—a problem that can distort conventional P/E multiples.