IT’S WIDELY ASSUMED that the Federal Reserve, our nation’s central bank, has two mandates: maximum employment and stable prices. But a closer look at the Federal Reserve Act of 1977 on the Federal Reserve’s very own website reveals a third mandate, namely “moderate long-term interest rates.”
Does a 1.7% yield on 10-year Treasurys and 2.15% on 30-year Treasurys count as “moderate long-term interest rates”? Since I have nothing better to do on the weekend,

PRESIDENT TRUMP recently criticized the Federal Reserve—yet again. Calling Fed Chair Jerome Powell and his colleagues “boneheads,” the president expressed frustration that they haven’t done more to lower interest rates. Specifically, the president said we should, “get our interest rates down to ZERO, or less.” That last part—“or less”—was key. Not only should rates be lower, he argued, but they should be below zero, as they have been in Europe.
Last week, the Fed did indeed cut short-term interest rates—by 0.25 percentage point.

PAST PERFORMANCE is no guarantee of future results. But we keep hoping.
Over the 10 years through August 2009, the large-cap stocks in the S&P 500 shed an average 0.8% a year, even with dividends included. Meanwhile, U.S. value stocks beat U.S growth stocks, smaller-cap U.S. shares notched 5.5% a year, developed foreign stock markets 2.7% and emerging markets 10.4%.
Fast forward one decade, and the leaders have become laggards and vice versa. Over the 10 years through August 2019,

IN DECEMBER 1954, 23-year-old John Neff hitchhiked from Ohio to New York in search of work. A Navy veteran, Neff had recently graduated college near the top of his class, with a degree in finance. His hope: to land a job as a stockbroker. But despite these qualifications, Neff was turned down. Why? According to a biographer, the brokerage firm felt “his voice didn’t carry enough authority.”
It didn’t take long for Neff to recover from this setback.

STOCKS MARCH EVER higher, portfolios get ever fatter and yet the conundrum facing investors remains the same. We have no idea what will happen next to share prices—and no reliable way of figuring it out. Consider:

Valuations are rich, but they have been for much of the past three decades. Indeed, if above-average valuations were your signal to sell, you likely would have dumped stocks long ago and missed out on substantial gains. The reality: Valuations don’t predict short-term returns,

THIS WILL SOUND like heresy to buy-and-hold investors. But I believe risks are building within the financial system—and we ignore these risks at our peril.
If you’re a diehard buy-and-hold investor who, come hell or high water, plans to dollar-cost average into the stock market, feel free to skip this article. It is not for you. On the other hand, if you believe—as I do—that there are more and less advantageous times to invest one’s capital,

YOU COULD ARGUE that U.S. stocks are reasonably priced, with the S&P 500 companies trading at 22 times their reported earnings for the past 12 months. That’s not much above the 50-year average of 19.3—and hardly outrageous, given today’s modest bond yields.
But you could also argue that U.S. shares are horribly overpriced. The S&P 500 stocks today offer a dividend yield of just 1.9%, versus a 50-year average of 2.9%. Shares also seem pricey compared to both the value of corporate assets and average company profits for the past 10 years.

WE GET MORE PAIN from losses than pleasure from gains—which might explain why I often think back on the five major market crashes that have occurred during my investing lifetime. There’s something about the massive hemorrhaging of money that has a way of focusing the mind and sticking in the memory.
Here are those five crashes, and what I learned from each:
Black Monday. I was age 24—with no money invested in stocks—when the S&P 500 plunged 20.5% on Oct.

THE YIELD CURVE HAS lately received a lot of press. Specifically, the inversion of the yield curve has many people worried that a recession is around the corner. I’ve been spending a lot of time recently thinking about the yield curve. I need to get a life, right?
You may be asking yourself, “Why should I even care about the yield curve, whatever that is?” Here’s why: The yield curve has inverted prior to every U.S.

I RECENTLY RECEIVED some odd communications from mutual fund giant Vanguard Group.
First, it sent a white paper, “Here today, gone tomorrow: The impact of economic surprises on asset returns.” As the title suggests, this paper examines the relationship between the economy and the stock market. In particular, the authors asked whether accurate economic forecasts could help an active trader profit in the stock market. Their conclusion: To beat a simple buy-and-hold strategy, an investor’s predictions would need to be accurate 75% of the time.

WITH INCREASING frequency over the past month, I’ve been hearing the question, “Why does the stock market keep going down? I understand why the market dipped when the Fed raised interest rates, but why does it keep going down day after day?”
If you’ve been feeling unnerved by recent headlines, you aren’t alone. After gaining 10% in 2018 through late-September, the U.S. stock market reversed course and gave up that entire 10% over the course of just two months,

IF THE STOCK MARKET decline resumes, we’ll soon be reading articles about remorseful everyday investors bemoaning their earlier foolishness.
No doubt some folks have been foolish. Perhaps they’ve belatedly discovered that Amazon and Apple aren’t one-way tickets to wealth, that they aren’t the investment geniuses they imagined, or that they misjudged their courageousness and shouldn’t be 100% in stocks.
But mostly, I view these articles as patronizing garbage that propagate the myth that all amateur investors are clueless and all professionals are super-savvy.

RECENT WEEKS HAVE been challenging for our country. We’ve seen horrific terrorist attacks. The midterm elections suggest the U.S. is deeply divided. While the economy has been doing well, the stock market has started to wobble. October, in fact, was the market’s worst month since 2011.
For all these reasons, folks have been asking me whether they should steer clear of the stock market for a while, until the dust settles. That sounds sensible—until you realize the difficult steps involved:
Step 1: Predict what’s going to happen and when.

“I DON’T KNOW.” Those may be the three toughest words for an investor to utter—and yet perhaps also the most important.
Despite the robust rebound of recent days, the S&P 500 is still down 6.5% from its September all-time high. Indeed, U.S. stocks just suffered their worst monthly loss since 2011. What should we make of the craziness? Here are five crucial unanswered questions:
1. Where are stocks headed?
As the saying goes,

IF THIS IS THE START of a bear market, share prices have a lot further to fall: The S&P 500 is down just 9.4% from its all-time high—and yet one of the most important lessons may have already been learned.
No, I’m not going to mock those who have lately proclaimed that stocks are the only investment worth owning. I don’t intend to belittle those who assume that U.S. shares can defy investment theory,