AS INTEREST RATES head higher, where should bond investors turn?
A lot of ink has been devoted to Series I savings bonds—for good reason. The initial yield, which applies to bonds bought through April, is north of 7%. Come May 1, it might go even higher if the inflation rate continues to climb. The recent energy price surge wasn’t fully reflected in February’s Consumer Price Index, so the coming months’ reports could be even more alarming.

INDEX FUND INVESTORS can take a victory lap each time the Standard & Poor’s Index Versus Active (SPIVA) scorecard is published. The results, while they don’t change much, underscore how futile it is to try to pick winning fund managers. The year-end 2021 report concludes what so many of us already know. Still, it’s helpful to be reminded, so we don’t get lured in by the latest hot investment narrative.
The 2021 numbers reveal a dreadful year for investment managers.

I RECENTLY STUMBLED on a way to save a significant sum on my home and auto insurance. While I knew that insurance companies use credit scores in setting premiums, I didn’t know about a policy option that could be turned to our advantage.
Our home, auto and umbrella policies are with Safeco, which is part of Liberty Mutual. I don’t know if this option is available with other insurers, although Liberty Mutual has many subsidiaries and I would guess it may be available with them.

ARISTOTLE WROTE THAT, “It is a part of probability that many improbable things will happen.” Investors certainly understand this. For better or worse, we know that the market has frequent ups and downs. On average, the S&P 500 has dropped 10% or more approximately every 18 months, and it’s dropped more than 20% about every four years.
Unfortunately for investors, another fundamental truism also applies: We dislike losses disproportionately more than we like gains.

JASON ZWEIG of The Wall Street Journal recently proclaimed the importance of courage when investing. Courage is indeed an essential quality, especially when mustering the resolve to buy stocks when there’s “blood in the streets,” as is the case quite literally today.
Yet I would argue that the greatest investment virtue—and the one that’s currently most lacking—is patience.
According to Morningstar’s Michael Laske, the average turnover ratio for U.S. stock funds is 63%.

“MARGIN OF SAFETY” is a concept with deep roots in finance, going back at least as far as Benjamin Graham’s Security Analysis, first published in 1934. The idea: Investors should never be too confident in any analysis and should leave the door open to the possibility that their analysis might be right but not precisely right.
Suppose you’re interested in buying Microsoft stock. And suppose that, after analyzing it,

A FRIEND ASKED ME if I was buying cryptocurrencies or nonfungible tokens. When I replied that I was not, my friend asked if I was afraid that I was missing out on the investment of a lifetime. That got me thinking about three great investments where I did indeed miss out.
First, in 1981, some young engineers were sitting around talking about what we should invest in. One fellow said he was going to buy a share of Berkshire Hathaway,

I RECENTLY WROTE about missing the chance to harvest tax losses. A reader decried this as market timing, which I found surprising. But on second thought, I can see where the reader was coming from.
Suppose we define market timing as any buy or sell decision that’s taken only when the time is right. Using this definition, I’m guilty as charged.
But if that’s the case, is all market timing bad? I’d argue it depends on the intent behind the action.

MUCH HAS BEEN written about the virtues and pitfalls of index funds that weight stocks based on their market value. In theory, every company’s stock market value reflects the collective wisdom of market participants. Apple the biggest stock in the world? Must be for good reasons, the thinking goes, so it should get a big index-fund weighting.
Well, the market cap of Russia in the Vanguard FTSE Emerging Markets ETF (symbol: VWO) as of Oct.

I WROTE ABOUT the perils of timing the market last Sunday. This week, I’ll address its close cousin: stock-picking.
These days, many people accept that stock-picking isn’t a great idea. Evidence shows that both professional and individual investors fare poorly, on average, when they choose individual stocks. But why exactly is that? How is it that indexes—which are simply lists of stocks—so frequently outpace the results of professional portfolio managers?
There’s more than one answer to this question.

THERE’S A SCENE in Three Days of the Condor, that very ’70s, America-in-decline movie, where the CIA is the bad guy and Robert Redford’s character is in danger of imminent extinction.
Max von Sydow’s character Joubert—the Alsatian assassin—warns him that he has “not much future.” Then he calmly describes how the CIA will come for him.
“It will happen this way,” Joubert says. “You may be walking. Maybe the first sunny day of the spring.

OVER THE PAST FEW months, we’ve been inundated with articles touting Series I savings bonds and their 7.12% yield. More than a few HumbleDollarers have written about them, including here, here, here and here. It’s gotten so bad that, if I hear one more mention of Series I bonds, I’m going to scream.
Sure, at first glance, 7% sounds enticing. But after a detailed review, it all sounds like a marketing pitch worthy of Uncle Ron Popeil rather than Uncle Sam.

SOMEONE ASKED ME last week about a popular and frequently cited market statistic. It goes like this: The U.S. stock market has historically delivered an average annual return of 10%. But if an investor had missed just the five best days over the past 30 years, that return would have been cut to 8.6%. If the investor had missed the 15 best days, the return would have been reduced even further, to 6.5%. Missing the best 25 days out of that 30-year period would have chopped an investor’s return in half—to just 4.9%.

CATHIE WOOD’S ARK Innovation ETF was the toast of the investing town in 2020 and early 2021. The star portfolio manager picked one winning stock after another—stocks that benefited as much of the world shifted to work-from-anywhere.
Like so many other hot funds, her time in the sun didn’t last. After Wood’s flagship ARK fund returned more than 150% in 2020, plus another 25% to start 2021, the bubble finally popped last February. The peak-to-trough decline was 57.6% through Jan.

I RECENTLY RETIRED and have a lump sum from my former employer to invest. For months now, I’ve presumed that I would just add it to our existing investments in the same proportions, easy-peasy. In practice, however, one consideration has led to another, so I’ve made no firm decisions.
Within our 70% stock-30% bond portfolio, I’ve long had a soft rule of keeping well over a third of our stocks in broad market index funds.