FINANCIaL
FIELd NOTES
10-Year Market Outlook
Because of the variability of stock market returns in the short run, I steer clients away from short-term tactical changes to their portfolio and prefer to rely on the weighty evidence of history, along with long-term thematic trends in the market.
While no one has consistently and accurately predicted what the stock market is about to do, several well-respected firms provide long-term outlooks that have proven to be more accurate than short-term predictions.
Below are the 2024 10+ year estimates…
A Fun Client Story About Poorly Timing the Market
Recently as I was reviewing a new client’s investment portfolio, I noticed a sizable position in Microsoft stock (this is not a recommendation to buy or sell). I looked at the “tax lots,” which show when the stock was purchased, and I saw January 17th, 2000. I was shocked.
As most investors know, 2000 was the beginning of one of the biggest market meltdowns of all time, known as the Dot-com bubble. Not only that but after doing a quick search, Microsoft stock peaked in January of 2000. It was obvious they had got caught up in the internet stock craze as many investors did…
Why I’m Holding Onto My I-Bonds
In January 2022 and January 2023, I purchased I-bonds to serve as a replacement for part of our family’s cash savings. Back in 2022 when I-bond rates were over 7%, I wrote about how if you had cash that you could afford to tie up for a year, I-bonds were a good option. Rates then peaked in the middle of 2022 at nearly 10% before starting to come back down. Last year around this time, I wrote about how I still thought I-bonds offered a reasonable rate over alternatives.
During 2023, inflation came down and I-bond rates that are linked to inflation continued to go down. Currently, rates are sitting at 5.27%. I’ve had a few clients ask if they should go ahead and cash out their bonds from the past few years now that rates have gone down…
Should Investors Consider Adding Private Debt to Their Portfolio?
A good investment portfolio needs diversification that also balances risk and reward. Investors often include a mix of stocks, bonds, and other asset classes in their portfolios to achieve their financial goals.
However, in recent years, there has been growing interest in private debt, an emerging asset class amongst the investing public…
An Update on the Bond Bear Market
The prolonged bear market that started in late 2020 marches on. Bond investors anticipated that the Fed would need to raise rates to bring inflation under control. They sold their lower-yielding bonds that were likely to be replaced with higher-yielding ones as rates ticked higher, which led to the first leg down in the bond market.
For now, bond investors are stuck in a historical downturn – about 16% off the highs from 2020…
The Risks of High-Dividend Investing
A few years ago I was asked by a client if we should consider moving a significant portion of their stock investments into dividend-paying stocks. I can understand their perspective – the promise of regular, consistent dividends can be tempting, especially for retirees on a mostly fixed budget. For example, a retiree who owns $1,000,000 of ABC high-dividend stock fund that pays them $50,000/year in dividends can provide a sense of security.
However, investing in companies solely for their high dividend can introduce a number of risks that investors should be aware of…