The worst advice EVER!!

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In an article that appeared on Smartmoney.com (http://blogs.smartmoney.com/advice/2011/08/22/when-401k-loans-are-a-smart-move/) on August 23, 2011, Olivia Mitchell from the Wharton School of Business and David Wray of the Profit Sharing / 401(k) Council of America praise those who used 401(k) loans before the market crash of 2008 and the recent market downturn.  Their logic is that since those people sold their stocks while the market was higher and are now paying themselves back at an interest rate of about 4.25%, they get ...

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Diversification in Action

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Diversification is a great way to reduce the ups and downs in your portfolio.  This morning, the effects of the earthquake in Japan and related issues around their nuclear reactors are wrecking havoc on stock markets around the world.  The Japanese market was down about 10.6%, Germany’s market was down about 4.8% and the US market (as measured by the S&P500) opened down about 2.5%.

How does this prove that diversification works if the major stock markets are all down on ...

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The revenge of “buy and hold”

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How well do you remember what happened in March, 2009?  That was the month that S&P finally stopped its historic downturn and slowly turned around.  While I don’t have exact numbers, my memory is that most news stories at the time were predicting a short upswing, then the dreaded “double dip” recession that would take stock prices down even lower.  More importantly, I don’t remember anyone saying this is the bottom and will get back to our highs in just ...

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