Investing

IT’S BEEN AN UNUSUAL week in the bond market, and not necessarily in a good way. This has many investors questioning the value of bonds, which is understandable. Bonds are supposed to be the “safe” side of a portfolio, but they’ve struggled in recent years.
Arguably, the drama we’re seeing in the bond market today began more than 50 years ago. To put today’s situation in perspective, I’ll briefly summarize that long history. Then we can look at what steps you might take to better protect your portfolio from here.

I’ve never cared much for bond funds. They never mature. Their NAV is at the mercy of Federal Reserve policy. 
I like how individual bonds mature and return my investment, but I don’t want the risk of owning individual issues. 
I nearly brought this question up in Mark Corothers ‘Flipin’ post, but didn’t want to send his discussion about real bond returns down the wrong rabbit hole.
So here goes. I have a CD ladder to protect me from a lost decade.

With the current fixed income environment, have you given any thought to your portfolio asset allocation?
For most of the last 15 years bonds paid next to nothing, a big fat zero actual return. For a stretch in 2021 they actually paid less than nothing: 10-year TIPS traded at negative real yields, meaning you were paying the government for the privilege of protecting your own purchasing power. In that world, equities weren’t one part of the growth engine.

EVERY THREE MONTHS, a small committee meets in Manhattan to make decisions that dictate where billions of retirement dollars flow. You won’t see them on financial television. They belong to the Index Committee at S&P Dow Jones Indices.
Nearly all readers here likely know the S&P 500 isn’t a mindless tally of America’s 500 largest businesses. Yet in an era dominated by mega-cap hype, it is worth remembering just how ruthlessly disciplined that curated roster really is.

I have been reading in some of the comments on the Forum recently that some of you use a total portfolio approach for your investments.  I tried to look it up in Jonathan’s guide but couldn’t find it. I don’t know what this is and was hoping some of you might be able to explain it in a way I could understand. I am not sure if this is something I need to research more?  I tried to look it up on Mother Google but didn’t understand what the AI said it was.  

An e-mail I received from Retirement Researchers by Wade Pfau contains this:
“If a retiree owns 1,000 shares before receiving a dividend and still owns 1,000 shares afterward, it can seem as though nothing has been spent. Selling 20 shares feels different because the account now holds fewer shares. That visual difference can reinforce the idea that dividends allow you to spend income while preserving principal.
For example, suppose a company is trading at $100 per share,

BY NOW, YOU’VE probably heard the story of the 25-year-old wunderkind Leopold Aschenbrenner. After graduating as valedictorian from Columbia University at age 19, he worked for FTX, the crypto trading firm, then found his way to OpenAI, where he worked as a researcher for about a year, until mid-2024.
In the months after he left OpenAI, Aschenbrenner wrote a 165-page paper titled “Situational Awareness,” in which he detailed his views on the future of artificial intelligence.

Be careful out there. Index composition is a key to getting consistency in your investment outcomes. Vanguard vs iShares vs State Street vs etc. As Jason Zweig writes in the Wall Street Journal, it all depends on the composition of the index.
 
https://www.wsj.com/finance/investing/how-a-few-hot-stocks-can-make-twin-funds-act-like-strangers-0ef7c52b?st=6mxLt3&reflink=desktopwebshare_permalink
 

AFTER YEARS OF heady gains in the stock market, many investors are facing the same question: To manage risk, they’d like to cut back on one or more of their holdings. But because of the potentially costly tax bill that might result, they aren’t sure exactly how to do that.
How can you square this circle?
One easy option would be to donate appreciated assets to charity. But that would make sense only if it aligns with your charitable goals and,

I saw this on the back page of today’s Wall St Journal.
“On this day in 1971, Wells Fargo launched the world’s first stock-index fund. One mutual-fund manager’s reaction: “If people start believing this random-walk garbage and switch to index funds, a lot of $80,000-ayear portfolio managers and analysts will be replaced by $16,000-a-year computer clerks. It just can’t happen.”

We all remember the 2022 bond collapse, triggered by rising interest rates. Most of us were caught out, a supposedly safe asset class posting double-digit losses. Some of those bond funds are still slightly underwater four years later. Which brings me to a question worth thinking about.
Right now, Treasury Inflation-Protected Securities (TIPS) are offering guaranteed real returns of roughly 2-3% above inflation. That’s a compelling, ultra-safe option for liability matching in retirement, and I think most people would do well to look into it.

TIPS are US Government securities that currently pay two to three percent real return depending on the maturity selected. You can buy them from your broker, Treasury Direct account, Exchange Traded Funds (ETFs) and mutual funds. So, if inflation for a time period is three percent, your bonds earn five to six percent depending on the time period. These real returns are guaranteed by the US Treasury. I will not give all the details here and am not giving advice.

WHEN IT COMES to financial decisions, many investors subscribe to an approach known as evidence-based investing. The idea, as the name suggests, is to base decisions, whenever possible, on data rather than on intuition or other informal methods.
This sounds logical. It isn’t perfect, though. Economic and financial indicators have weaknesses which are important to be aware of. 
Consider, for example, the Cyclically-Adjusted Price-to-Earnings, or CAPE, ratio, developed by Robert Shiller, a Yale professor and Nobel laureate,

THE OTHER DAY, WHILE walking to my mailbox, I noticed a summer class schedule for a private gifted youth academy lying on the ground. I assumed it belonged to one of my neighbors, who has elementary-aged children.
Their interest in extra academics didn’t surprise me. Many families move to this area because of its excellent schools. Parents here clearly value education. On any given day, it’s common to hear children practicing the piano or violin as you walk through the neighborhood.

INNOVATION IN THE world of retirement plans is decidedly slow moving. But as of July 4th, investors now have a new savings option known as a Trump account. In short, these are retirement accounts designed specifically for children.
Trump accounts share some similarities with traditional individual retirement accounts (IRAs), but there are also key differences. If you have children, grandchildren, nieces or nephews, this new option may be worth exploring.
Who is eligible for a Trump account?