DIVIDEND YIELDS MAY be tiny, but they sure they get talked about a lot. As Rick Connor pointed out on Friday, the S&P 500 stocks collectively yield just 1.3%—near 20-year lows. Yields have fallen as share prices have climbed and as companies have put more emphasis on stock buybacks. In fact, today, companies spend more on buying back their own shares than paying dividends.
Companies continuously manage their capital structure—how much of the enterprise is funded by issuing stock and how much with debt.
HOW LUCKY I WAS to be the recipient of a dinner invitation to Ruth’s Chris. I love a sizzling ribeye, so I booked my seat at the event. Those nearing and in retirement have a good idea of what I’m referring to—the good old annuity sales presentation.
These dinners are put on by financial advisors looking to expand their business. The routine goes like this: Invite prospects, present for an hour on the benefits of owning insurance or an annuity,
STEPPING INTO the HumbleDollar confessional, I admit to dabbling in a few high-fee, low-liquidity investments. It goes against much of what I stand for. But on occasion, I, too, reach for yield and the promise of returns uncorrelated with stocks. Before the chastising begins, please know that these speculative stakes total less than 3% of my portfolio. The rest is invested mainly in funds with expense ratios under 0.15%—and some have zero costs.
AT THE CRACK OF DAWN each day, I grab a cup of coffee, and then dig into the latest investment articles and research reports. Last week’s most intriguing insight: According to data from Emerging Portfolio Fund Research, investment flows into global stocks are on pace to hit $1.048 trillion this year.
To appreciate the magnitude of this year’s inflows, consider that 2017 ranks as the next strongest year—at a relatively paltry $300 billion. Other years,
PETER LYNCH, the famed Fidelity Investments’ mutual fund manager, used to advise investors to “buy what you know.” But many of today’s investors have other ideas.
Obscure cryptocurrencies and nonfungible tokens have taken the financial social media by storm. Most investors have heard of bitcoin, ethereum and dogecoin. But a new set of coins have emerged—cardano and solana are the hot trades. Meanwhile, JPEG and GIF image files are changing hands for ridiculous amounts of money.
TEN YEARS AGO, I recall sitting in a meeting at a local financial planning firm. We hadn’t heard of cryptocurrencies. The term “FAANG stocks” hadn’t yet been coined. On the minds of many individual investors was a different hot asset: gold.
Gold is the butt of many jokes in the financial blogosphere these days. Who can blame them? The shiny metal is flat over the past decade—and, of course, has produced no dividends in that time—while the S&P 500’s total return is more than 370%.
A DECADE AGO, I was sure I knew everything. I scrimped and saved as much as I could to fully fund my retirement accounts. My goal was to retire early. All that was fine for me.
My error: casting my credos on others. I gave my parents grief for what I considered to be their excessive spending and insufficient regard for long-term planning. I was wrong.
While it’s imperative for those in their 40s and 50s to have their retirement plan on track,
ALL EYES ON FRIDAY were focused on Federal Reserve Chair Jerome Powell. “Will Powell announce an aggressive taper plan?” many market-watchers wondered. Not a whole lot new was presented, and that triggered a stock market rally. The S&P 500 notched its 52nd all-time high of 2021 and the Russell 2000 small-cap index had one of its best days of the year.
Small caps got off to a hot start in 2021. By mid-March, the Russell 2000 was up 19% on the year,
GROWING UP, my older brother beat me in just about every sporting match we played. Basketball, football, tennis—it was remarkable.
I noticed his key to winning was avoiding mistakes. Take tennis. My brother would casually return a soft lob over the net to avoid an unforced error. Meanwhile, I’d pretend I was Andy Roddick and go for the forehand winner every chance I got. My brother would simply watch as my aggressive shot landed outside the lines.
I MAY BE THE POSTER child for the new retirement, switching back and forth between standard employment and side gigs, as I seek work that I find fulfilling. I’m not alone: It seems many people are retiring earlier than they planned and then working part-time, moving in and out of the workforce based on need and opportunity.
The annual Retirement Confidence Survey from the Employee Benefit Research Institute (EBRI) shows that—while workers expect to retire at age 65—the median retirement age is actually 62.
THERE’S A LOT of handwringing right now about U.S. stock market valuations. Prof. Robert Shiller’s cyclically adjusted price-earnings ratio, or CAPE, has rarely been more famous—or perhaps infamous. It’s currently perched near 39, meaning buyers of the S&P 500 are paying almost 39 times average inflation-adjusted corporate earnings for the past 10 years. That number might mean little to many without proper context. It was around five at the worst of the Great Depression,
BANK OF AMERICA’S monthly fund manager survey takes the pulse of portfolio managers around the world. The latest survey was released last week—and some of the results weren’t so rosy.
Despite a record-breaking quarter for corporate profits, which blew past analysts’ predictions, money managers have turned more bearish. Perhaps recent market volatility, especially among foreign stocks, has caused jitters. Also casting an ominous cloud is the Delta variant’s global spread. On top of that,
NOW MORE THAN EVER, people are hungry for yield or, failing that, a reliable return that doesn’t hinge on the performance of the stock and bond markets. Those puny money market and “high yield” savings account rates may suffice for your emergency fund. But after factoring in inflation, keeping too much in cash investments is a losing proposition.
Last week, a 50-something neighbor asked me for investment ideas to help him bridge the gap between now and retirement.
REMEMBER 2020’S BIG market swings? Financial markets have been more boring of late. But are things too quiet?
The VIX is the most commonly cited indicator of market volatility. Turn on CNBC or flip through The Wall Street Journal and you’ll likely learn the latest reading for the “fear gauge.” Last Friday’s close was among the lowest of the year, with the VIX at a little more than 15, versus an historical average closer to 20.
FINANCE NERD THAT I am, I gleefully dug into the 2021 Capital Markets Fact Book that was just published by SIFMA. I was particularly humbled by a chart showing the breakdown of the global stock and bond markets. Why humbled? The data show just how great we U.S. investors have had it in the past decade.
The Fact Book first displays the $58 trillion global stock market’s composition in 2010.