MY STANDARD ADVICE has always been to keep roughly two-thirds of a stock portfolio in U.S. shares and a third in foreign stocks. As I see it, we invest now so we can spend later. Come retirement, most of us will spend our savings on U.S. goods and services, so it makes sense to have the bulk of our assets in dollar-denominated investments.
But I’m having second thoughts. U.S. and foreign stocks each account for roughly half of global stock-market capitalization,
U.S. STOCKS are expensive. What about foreign shares? They’ve been lackluster performers, not only in 2014, but also over longer holding periods. While the S&P 500 clocked an 8% annualized total return over the past 10 years, Morgan Stanley’s Europe, Australasia and Far East index gained just over 5%.
Foreign stocks also appear to be cheaper. Consider the stocks in Vanguard Group’s developed markets index fund and those in its S&P 500 fund. The foreign stocks are trading at 1.6 times book value (or assets minus liabilities),
GOLD HAS NEVER been an investment I’ve been comfortable with. The problem: It has no intrinsic value. Unlike a bond, it doesn’t pay interest and, unlike a stock, it doesn’t have earnings or pay a dividend. Instead, gold has value mostly because the supply is limited and because owners have faith that others will also view it as valuable.
And yet, today, I consider myself a fan — though I favor owning gold-mining stocks, rather than the metal itself. I still have no firm sense for what gold is worth.
YESTERDAY MORNING, I spoke at career day at the Philadelphia school where my daughter teaches. My two fellow panelists were a city planner and a fundraiser for a local ballet company. What did we tell the 11th grade kids? Interestingly, all three of us focused on the same themes:
You’re unlikely to have a single career. Instead, you’ll switch direction as you discover what you’re good at, the world changes around you and you grow weary of your current job. Those born in 2000 can expect to live until age 86,
IN MY MOST RECENT column, I discussed how expected U.S. stock returns for the next 10 years were modest–and how it would take a 25% decline to get me enthused about the market. That raises an obvious question: What should investors do?
Forecasting returns for the next 10 years is tricky. Forecasting returns for the year ahead is impossible. The implication: We need to base our investment decisions on something other than a short-term market prediction (a.k.a.
MY MOST POPULAR COLUMNS often focus on the intersection between money and the rest of our lives–topics like money and happiness, teaching kids about money, and how to tweak a portfolio to reflect our human capital, debts, real-estate holdings and other aspects of our finances.
I have been toying with pulling these various threads together into a long essay that I might publish as a 99-cent e-book. In part, I’m inspired by William Bernstein’s success with If You Can,
MY COLUMN ON FINANCIAL BELIEFS, published August 24, unleashed almost 500 emails from readers. I try to respond to all messages, except those from folks who are foaming uncontrollably at the mouth, so this was a mixed blessing–but, two weeks later, I’ve finally cleared the backlog.
That brings me to a sad insight from the columnist’s life: I can devote weeks to writing a nerdy article, and get almost no response from readers.
IT’S BEEN FIVE MONTHS since I returned to the life of the ink-stained wretch. Not surprisingly, things are a tad different from 2008, when I was last writing a regular column. Perhaps the biggest change is the comments from readers that are posted at the bottom of every column. I don’t spend much time perusing these comments, in part because they’re often only tangentially related to what I wrote. Instead, many of these folks seem to know each other and banter back and forth,