WHILE JIM AND I cooked dinner the other night, we talked about the old cars we drove when we were younger—and how they tended to pull to one side if we took our hands off the steering wheel. We humans have a similar tendency: We head in one direction unless we make a conscious effort to be more rational.
That brings me to the coronavirus and accompanying stock market plunge. We all have gut reactions to news like this.
I WRITE THIS from somewhere in the Atlantic. We’re headed toward the Falkland Islands, where we’ll apparently see penguins. My wife and I booked this cruise months ago. Since then, of course, we’ve been told repeatedly that being on a ship for 30 days with mostly 60- to 80-somethings is not the best idea. Who knew?
There was a time when getting away meant little connection to the outside world. No more. My iPad and iPhone keep me connected,
WHEN YOU SEE an advertisement, you expect some hype. Ads for investment newsletters are, alas, no exception.
Sometimes, you hear about their unique investment process or how the newsletter regularly beats the market. Some offer one-sentence testimonials from happy subscribers. The message: You, too, can enjoy the benefits of their secret methodologies for a low, low price.
Yes, the ads are undoubtedly compelling. But you need to separate the hype from reality. Fortunately, Hulbert Financial Digest does just that—by tracking the performance of investment newsletters.
IS THE STOCK MARKET swoon messing with your head? You don’t want to make this market decline any worse than it has to be. To that end, here are 10 steps that’ll help preserve your sanity and your portfolio:
Avoid touching both your face and leveraged exchange-traded index funds.
Change the password on your investment accounts to “ItsTooLateToSell.”
Downgrade your opinion of investors based on their degree of hysteria.
Don’t watch Contagion,
RETIREMENT ISN’T just about reaching some magic savings number. You also need a strategy for turning that pile of savings into a reliable stream of retirement income that’ll last for the rest of your life.
In academic lingo, it’s about changing from accumulation to decumulation—and it’s a topic that my husband Jim and I grapple with, as we figure out how best to cover our retirement expenses. There are three common strategies:
I’VE DEVELOPED a series of what I call “Geico talks,” named after the ubiquitous insurance company commercials. They’re 15-minute talks that, I joke, are aimed at boosting financial knowledge by 15% or more.
The talks are for friends and acquaintances who work at the same company as me or at companies with similar employee benefits. These firms typically have great retirement plans and many employees own company stock. I figured the topics I’d researched for my own finances would help these folks.
STOCKS HAVE YET to close 20% below their Feb. 19 all-time high, so technically the U.S. market hasn’t entered bear market territory. Still, after this morning’s sharp drop, the S&P 500 is 17% below its peak.
If this decline does indeed become a bear market, how can you prepare yourself? A bear market can be an emotionally gut-wrenching time—one that leaves you feeling vulnerable and helpless. But there are steps you can take to limit the damage to your investment portfolio.
I FIRST STARTED managing mutual funds a few months before the 1987 stock market crash, and I’ve had to navigate a fair number of market declines since then. My advice: Instead of worrying about how far share prices will fall or how widely the coronavirus will spread, think about the opportunities. I spy four of them.
1. Buy the dip. If you have cash, you might slowly dollar-cost average into the market,
“HOW BAD WILL it get—and how long will it last?” In my last article, I mentioned that many people had asked me those two questions. This past week, amid the continuing stock market tumult, some folks have been raising a third question: “Should I even bother investing in the stock market? It just seems crazy.”
It’s a fair question. On Monday, the market was up 4%, before dropping 3% on Tuesday. On Wednesday, it was up 4% again,
I’M MANAGING my money with an eye to making it last another three decades. And yet, everywhere I turn, it seems somebody’s insisting I pay attention to what’s happening in the financial markets right now.
This isn’t just a coronavirus phenomenon. It is, alas, standard operating procedure for the financial media.
I understand the game. I’ve spent most of my career as a journalist, so I realize it’s no small undertaking to fill up a newspaper,
WHAT I FIND surprising about the stock market isn’t its recent dramatic pullback, but how I’ve reacted. I simply haven’t paid much attention. It’s just been business as usual. I haven’t even looked at my portfolio or watched CNBC.
Such a calm demeanor is unusual for me. A few years ago, if I experienced this type of market decline, I would have made big changes to my portfolio. Yet this time around, I just shrugged my shoulders.
IT’S COME TO THIS: I’m writing an article discussing the virtues of EE savings bonds. To be sure, I’m not currently planning to buy them myself. But they could make a fine investment for more conservative investors who are happy to sit tight for the next two decades.
Yes, the current yield on EE savings bonds is a mere 0.1%. But if you hold EEs for 20 years, the Treasury Department guarantees that your savings bonds will double in value,
IF YOU TOOK an economics class in high school or college, you might see its usefulness as limited to helping with your grade point average. But the basic ideas you learned can still be valuable. Take this introductory microeconomics question: In a typical transaction, who has more power, the buyer or the seller?
When I started teaching economics many years ago, I gave the nod to buyers. Invoking the notion of “consumer sovereignty,” I’d explain to students that buyers have the power to vote with their feet—by walking to another store.
WE HAVE MUCH to learn about the coronavirus, but we already know a great deal about financial risk—and, indeed, recent weeks have offered a brutal refresher course. What insights can we draw from investors’ reaction to this awful epidemic? Here are eight timeless lessons:
1. The greatest risks are those we never see coming.
Some risks are predictable, such as stock market volatility. Others are less probable but widely known, like the possibility of a recession.
MY LAST JOB in mainstream journalism was in 24-hour TV news. When a big story broke, we dropped everything. The viewers, we were told, were only interested in one story. Today that story is COVID-19, better known as the coronavirus. Next week—perhaps even tomorrow—it could be something completely different.
Human beings are finely attuned to what we see as immediate threats. It’s how we evolved. But it isn’t always helpful. The reality: The chances of any of us catching the coronavirus,