Cutting the Bonds

Dennis E. Quillen  |  Oct 16, 2018

I DON’T WANT BONDS in my portfolio—or, at least, not to the degree traditionally recommended in financial planning guidelines.
For years, I had accepted the premise that bonds should be included in a serious investor’s portfolio. Not that I necessarily followed that dictum. But I accepted the idea that young people should have a low percentage in bonds, and increasingly greater percentages through middle age and retirement.
I kept thinking that someday I’d come around to more bonds,

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Stepping Back

Adam M. Grossman  |  Oct 14, 2018

AS YOU NO DOUBT noticed, the stock market took investors on a wild ride last week. On Wednesday, the Dow industrials dropped more than 800 points. On Thursday, the Dow lost another 546 points. Friday was better, up 287 points, but there was still plenty of stomach-churning volatility.
At times like this, I’m reminded of Warren Buffett’s motto: “You want to be greedy when others are fearful, and you want to be fearful when others are greedy.” While that certainly sounds logical,

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Jack of Hearts

Jonathan Clements  |  Oct 5, 2018

ON WEDNESDAY, Vanguard Group’s 89-year-old founder John C. Bogle was in hospital to receive treatment for his latest health scare—an irregular rhythm in his transplanted heart. On Thursday and again today, he was at the Bogleheads’ 17th conference in Philadelphia, as feisty as ever.
The Bogleheads are, of course, the online community who congregate at They’re renowned as fans of frugality—especially frugally priced index funds. And Jack Bogle—even though it’s been more than two decades since he was Vanguard’s Chief Executive Officer—remains their guiding light.

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Not for You

Adam M. Grossman  |  Sep 30, 2018

MY GRANDFATHER WAS from Queens in New York City. He was a great guy and taught me a lot. He was also a native New Yorker, so he was street smart and tough.
One day, while we were walking together down 47th Street, near Times Square, I stopped to look at the jam-packed window of an electronics store. My grandfather waited patiently, but cautioned me, “Careful, they’ll take the eyes out of your head.”
It was a funny expression,

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Off Target

Adam M. Grossman  |  Sep 23, 2018

ALBERT EINSTEIN reportedly once said, “Everything should be made as simple as possible, but not simpler,” or words to that effect.
When it comes to investing, I have always believed that the simplest approach is the best approach. But in recent years, a new type of investment has, I believe, crossed over into the “too simple” category.
This new type of investment: target-date mutual funds. If you aren’t familiar with them, target-date funds are mutual funds that typically buy other funds.

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Just Like Warren?

Adam M. Grossman  |  Sep 16, 2018

THE NOTED PHYSICIST Lord Kelvin reportedly declared in 1900, “There is nothing new to be discovered in physics now.” In the annals of inaccurate proclamations, this one stands out. Just a few years later, Einstein published his Theory of Relativity and, in the following years, proceeded to upend many of the scientific world’s longest standing and most deeply held beliefs.
The world of personal finance witnessed a similarly inaccurate prediction 76 years later. When the newly formed Vanguard Group launched its first index fund,

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Any Alternative?

Adam M. Grossman  |  Sep 9, 2018

THE STOCK MARKET recently hit yet another all-time high. But instead of unalloyed glee, many investors are struggling with mixed emotions. They’re thrilled at their gains. But at the same time, they’re hesitant to put more money into a market that has already gained so much.
Result: Folks have been asking, “Isn’t there anything else I can buy?” Often, this leads to questions about alternative investments. Below is an introduction to the topic,

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Buy What You Know

Adam M. Grossman  |  Sep 2, 2018

KANYE WEST, IT TURNS out, is one heck of an investor. According to a recent analysis, a group of West’s stock picks has beaten the overall market by 40 percentage points this year. It’s an astonishing result. What, if anything, can we learn from his performance?
First, some background: As you may know, West is married to Kim Kardashian, who is one of the dominant personalities on social media, so it was via Instagram that the world gained a window into these investments.

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Staying Focused

Adam M. Grossman  |  Aug 26, 2018

MY SONS’ BASKETBALL coach, George, has a favorite expression: He talks about “working through the uglies.” When you’re developing a new skill, he says, you shouldn’t expect to be perfect the first time or even the second. But if you keep working at it, over time there will be progress, “from ugly to not-so-bad to decent to good and then, eventually, to great.” The message is clear: You can’t rush it, you can’t skip steps and you have to start with the basics.

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Bad News

Jonathan Clements  |  Aug 25, 2018

WHEN I WAS a columnist at The Wall Street Journal, I repeatedly heard two complaints from editors, especially those with little understanding of personal finance: “Our readers want something more sophisticated” and “Where’s the news hook?”
That, in a nutshell, explains why the media can be so bad for our financial health. When print and broadcast journalists cave in to the twin imperatives of timeliness and sophistication, they’re almost guaranteed to lead their audience astray—for three reasons:

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No Place Like Home?

Jonathan Clements  |  Aug 18, 2018

WE CAN’T CONTROL the financial markets. But we can pretty much guarantee we’ll pocket whatever the stock and bond markets deliver—by buying index funds. So why do I hear so much grousing from indexers?
At issue isn’t a failure of index funds, but rather a failure of investors’ expectations. Over the past few months, I’ve heard from countless hardcore indexers who have done the sensible thing and built globally diversified portfolios. Often, they own some variation of the classic three-fund portfolio: a total U.S.

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Separated at Birth

Adam M. Grossman  |  Aug 12, 2018

IF YOU’RE A FAN of basketball, you may be familiar with the Lopez twins—Brook and Robin. On the surface, they are identical in every way. Both stand seven feet tall. Both went to Stanford University. Both entered the NBA draft in 2008 and both were picked in the first round. Since then, both have enjoyed successful careers.
A casual observer would be hard-pressed to see any difference between the Lopez twins, but there is one: While they are both impressive players,

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Low Fidelity

Jonathan Clements  |  Aug 11, 2018

WE HAVE FINALLY HIT rock-bottom. Last week, Fidelity Investments announced that it was introducing two index funds with zero annual expenses, while also slashing expenses on its other index funds and dropping the required minimum investment on all funds, both actively managed and indexed. All of this raises five key questions.
1. Why is Fidelity doing this? I view Fidelity’s move as both bold and borne of desperation. When I started writing about mutual funds in the late 1980s,

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All of the Above

Adam M. Grossman  |  Jul 22, 2018

A QUESTION FOR YOU—a trick one, I admit: Should you invest in technology stocks, such as Apple?
My answer: Yes, certainly.
Another question, also a trick one: Should you invest in the stocks of entertainment companies like Netflix?
My answer: Again, yes, of course.
A third question: Should you invest in energy companies, such as ExxonMobil?
My answer: Again, yes.
You might wonder why I’m asking these questions and why I’m answering “yes” to all of them.

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Piling On

Jonathan Clements  |  Jul 21, 2018

FORGET XBOX AND PlayStation. If you’re an investment nerd, nothing beats playing with a financial calculator, especially running scenarios that combine dollars, investment returns and great gobs of time. Here are six mathematical musings—not all of them happy:

Got a newborn daughter or granddaughter? If you invest $1,000 on her behalf and the money notches 6% a year, she’ll have almost $106,000 at age 80. That 6% is my assumption for long-run annual stock returns.

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