With interest rates rising for cash, CDs, and bonds, there is renewed interest in owning more conservative investments instead of riskier assets like stocks. Since the best estimate of future bond returns is roughly their starting yield, 5% is probably a fair place to start (while nothing is certainly guaranteed). Stocks on the other hand have earned 10% per year on average.

For some investors, it may make sense to take less risk and “clip” the bond coupon, especially for the money they plan to spend in the coming years. But many investors, including retirees, often have a portion of their investments that are for long-term growth over 10-20+ years that have historically been in stocks…

Over the past decade, the weight of the top 10 stocks in the S&P 500 has nearly doubled.

It’s nearly impossible for the market to be up or down without these big stocks (Apple, Amazon, Google, etc.) going in the same direction. This is not a first – in the 70s, over 40% of the market was dominated by the top 10 stocks, and even more by the “nifty fifty.” While this does introduce some risks if these companies were to be broken up or face increased competition, in general, I don’t view it as a significant concern for three main reasons…

In the world of finance and media, there are often conflicting narratives about the state of the economy and stock market. Recently, with the S&P 500 reaching a new all-time high, there have been many voices in the media questioning the justification of the ongoing bull market.

However, a closer look at the numbers reveals that many of the companies reaching all-time highs are also significantly more profitable than they were in the past. The largest 20 US companies have grown earnings at 15% per year over the last 5 years on average…

With the S&P 500 reaching all-time highs for the first time in nearly 2 years, many are skeptical that a bear market is coming. Investors are often tempted to assume extremes are always around the corner - either a new bull market or the next bear market.

The reality is that somewhere in the middle is where most investing happens - but we often mistake it for the extreme…

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…

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…