China’s real impact on your portfolio

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The stock market has fallen by about 7% in the last four weeks as measured by the S&P 500, ostensibly because of China’s growth slowing down and other international issues.  The question that every investor needs to ask themselves when the markets experience big swings is “Am I okay with this?”.

There is no way to anticipate the exact date of a market decline or the date the market starts is recovery.  Attempting to do so is pure folly.  The best ...

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Holding Cash

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There were two interesting articles about holding cash yesterday.  One was about retirees holding several years worth of cash  (click here to read) and the other was about companies holding cash on their balance sheet (click here to read) .  What is interesting is that both articles came to the conclusion that holding large amounts of cash is detrimental to overall performance.  However, both articles miss the same critical point – ...

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Managing your portfolio in retirement

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One of the biggest financial impacts of retirement is the mind-set change that is needed to manage your portfolio.  Prior to retirement, financial planners recommend having “ready-cash” or an emergency fund equal to 3 – 12 months of expenses.  In addition, every month you are adding money to your portfolio through 401(k) accounts, IRAs, etc.

In retirement, the dynamics of your portfolio are turned upside down.  Instead of adding to your savings every month, most people need to take money out ...

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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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