Worst Year Ever

Greg Spears  |  Nov 8, 2022

BONDS ARE ON PACE to have their worst year on record. To be sure, once interest rates stop rising—perhaps early next year—they may win back their place as a worthwhile investment for retired investors. But right now, that feels like wishful thinking.
As the Federal Reserve has hastily raised short-term interest rates in big steps to fight inflation, bond prices have fallen down the cellar stairs. Bloomberg’s broad U.S. aggregate bond index is down 16% in 2022.

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TINA Is Dead

John Yeigh  |  Nov 6, 2022

OVER THE PAST FEW weeks, my wife and I did something we hadn’t done in four years: We bought bonds.
Specifically, we parked some money in one- to two-year Treasurys paying 4.3% to 4.6%—the highest rates in 15 years. Our portfolio now approaches 5% bonds, and we plan to buy more. We’re waiting to capture higher rates following the expected Federal Reserve rate increases.
Bonds represent a seismic shift for us. In early 2020,

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Stellar Results

Edmund Marsh  |  Nov 5, 2022

THE NATIONAL Aeronautics and Space Administration (NASA) has good reason to boast. Its programs serve as a catalyst to generate billions of dollars of economic activity that’s spread across all 50 states and the District of Columbia. Also, the transfer of NASA spinoff technologies and products to private businesses improves the lives of each of us in myriad ways.
Along the way, it’s even put men on the moon—and plans to do so again,

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Convenience’s Cost

Gaurav Kumar  |  Nov 4, 2022

ONE OF THE BEST features of the stock market is liquidity—but it’s also one of the worst.
Whenever the market is open, we can find out precisely what our investments are worth and, if we’re so inclined, we can turn our stocks into cash with the click of a button. But this convenience comes with a major disadvantage: Yes, we can buy at any time—but we can also sell. This tempts some to bail out at the worst possible moment,

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Should Have Waited

Jonathan Clements  |  Nov 3, 2022

BILLIONS OF DOLLARS poured into Series I savings bonds toward the end of October, as investors rushed to snag the 9.62% annualized rate then on offer, which was guaranteed for the first six months. But it turns out these folks were a tad too hasty.
How so? Buyers of I bonds are promised a pretax return equal to the inflation rate, plus they sometimes also get an additional fixed rate of interest, over and above inflation,

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Own It All

Greg Spears  |  Nov 2, 2022

ONLY CASH IS SHOWING a positive return this year, while most parts of the stock and bond market have suffered double-digit losses. And with inflation spiking, even cash investments have been a losing proposition in 2022. With nowhere to hide, perhaps it’s time to renounce active management and consider the three-fund portfolio.
Long championed on the Bogleheads forum, the three-fund portfolio is an indexing approach that drives down costs, feasts on diversification and ends investment selection errors by sticking with just three funds:

Total U.S.

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An Average That Isn’t

Mike Zaccardi  |  Oct 31, 2022

VALUE STOCKS ARE having quite the year—at least relative to growth shares. This past week underscored that trend, with the value-oriented Dow Jones Industrial Average (DJIA) rising every day. Barring a big drop today, October will mark the index’s best monthly performance since 1976.
Even as the Dow rallied 5.7% last week, the growth-heavy Nasdaq Composite index rose just 2.2%. For the year, the Nasdaq is down 29%, versus less than 10% for the Dow.

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Telling Tales

Adam M. Grossman  |  Oct 23, 2022

WHEN I WAS IN SCHOOL, corporate executives often visited for guest lectures. Two of these presentations still stand out in my mind.
The first was the CEO of a company then called Flextronics—now simply Flex. It’s a contract manufacturer that assembles products for other companies. Apple, for example, doesn’t have factories of its own and instead relies on outsourcers like Flex to build its products, usually in Asia.
You might wonder why a presentation like this would be memorable.

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Back Where I Started

Steve Abramowitz  |  Oct 21, 2022

AT LOOSE ENDS DURING the summer of 1967, when I was between college graduation and the start of my psychology training, I chanced upon a book by Sheldon Jacobs. An early advocate of no-load mutual fund investing, Jacobs’s book and his subsequent No-Load Fund Investor newsletter provided my market mantra until exchange-traded index funds (ETFs) started taking off circa 2000.
Buying directly from the fund company, and thereby bypassing brokers and their upfront 8.5% commission,

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Hold Opinions Loosely

Adam M. Grossman  |  Oct 16, 2022

WARREN BUFFETT HAS said that, when he’s in his office, he spends about 80% of his time reading—​as much as 500 pages each week. And for good reason. One of his mottos is that “knowledge compounds.”

Judging by his track record, this approach seems to work. Even in his 90s, Buffett believes there’s always more to learn and that more knowledge will lead to better investment results.

At the same time, investors often invoke expressions that suggest otherwise: No one has a crystal ball.

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My Investment Sin

Jonathan Clements  |  Oct 15, 2022

I’LL CONCEDE IT’S HARD to justify—but I don’t believe it’s 100% unjustifiable. At issue: my strategy of overweighting stocks during big market declines. I did so in 2007-09 and early 2020, and I’m doing so today.
“Market timer,” cry the critics. That, in financial circles, ranks as pretty much the nastiest insult you can hurl, even worse than calling someone an “annuity salesman.”
Today, if I ignore the money I’ve set aside for a big home remodeling project,

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Misjudging the Speed

Adam M. Grossman  |  Oct 9, 2022

FOR ELON MUSK, IT HAS—to use his own words—been a “very intense seven days.” Just over a week ago, Tesla demonstrated a new prototype product, a robot called Optimus. A week ago, it announced that it had delivered a record number of new vehicles in the third quarter. And, on Wednesday, a rocket built by SpaceX, one of Musk’s other companies, completed a successful launch from Cape Canaveral, carrying astronauts to the International Space Station.

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Where’s My Rate Hike?

Richard Connor  |  Oct 7, 2022

RISING INTEREST RATES are impacting everyone. The Federal Reserve has raised short-term rates at its last five meetings. It hiked interest rates 0.75 percentage point at its September meeting, the third time this year it’s raised rates by that amount. Bankrate reports that current projections see the Fed boosting rates by another 1.25 percentage points before year-end.
These increases affect what consumers pay for mortgages, car loans and credit card debt. As I write this,

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A Sporting Chance

Steve Abramowitz  |  Sep 30, 2022

WANNA BET TOM BRADY has the real golden arm? I’ll take the other side of that wager. At the Borgata Casino in Atlantic City in 2009, Patricia Demauro’s golden arm rolled the dice 154 times over four hours and 18 minutes without losing.
Yup, football is back and sports gambling is on a roll. Several states have legalized it, and many others are proceeding in that direction.
My 35-year-old son Ryan, a math jock and sports fanatic,

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Stock Raving Mad

Richard Quinn  |  Sep 27, 2022

ONCE YOU GET BEYOND index funds, I’m out of my league, so I ask this as a naive investor. Can someone please explain the stock market to me? Okay, I guess that’s a trick question—because I don’t think anyone can explain the financial markets to anyone.

I’ve heard that markets are forward-looking. If that’s true, how come stocks react wildly to information that has been publicly anticipated for days, even weeks? Why the big surprise?

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