Question: I have dropped commodities for the “well rounded portfolio” and embrace pretty much what you have advised here in this November post. But you don’t mention REITs [Real Estate Investment Trusts]. I still have about 8% in REITs but am thinking of selling those as well. Thoughts? Answer: REITs are businesses, so they fit into Read more »
The Ride Is the Reason for the Return
I despise market commentary, both for the presumption that anyone really knows the reason for short-term movements and because it distracts people from the fact that investing in equities is a matter of long-term ownership in the businesses that provide the world’s goods and services. Fluctuations in human emotions explain more of the short-term movement Read more »
Is This a Reasonable Allocation for a Working-Age Investor?
Question: I’m considering changing our retirement portfolio allocations as indicated below. Would you mind commenting on this? Nearly all is in tax sheltered retirement accounts and we probably will begin easing into retirement in 12 years at age 60. I read your blog and think it makes sense for us to maintain separate asset classes Read more »
Is 295 Stocks Enough Diversification?
Question: ACWV has only 295 holdings. How can this be a truly global, highly diversified fund? Thanks. Answer: I like the way you think. The greatest danger in equity investing is inadequate diversification, and I’d much rather someone be overdiversified than underdiversified. I’m also not going to fight to the death on this one, since Read more »
What about Dividend-Growth Investing?
Question: May I ask what your opinion is re “dividend growth investing”? The angle that attracts me is that if one could get by on the dividends alone (in addition to Social Security, pension, etc.), you would not be forced to sell assets to live on during a down market. As such that would constitute Read more »
What Is a Good Diversification Strategy for Bonds?
Question: Andrew Tobias said to “Ask Less” the money questions. OK, here’s mine. Is the following a good diversification strategy for bond holdings: 50% total bond index, 50% intermediate bond index? Many bond funds mirror the Barclays U.S. Aggregate Bond index. However, supposedly around 75 percent of the index tracks government securities or other types Read more »
How Much Better Is Alternative Weighting of Stock Indexes?
Question: Can you review the research on market weighting vs. equal weighting vs. fundamental weighting? What might be the long-term advantage in return for one method vs. another (or, to put it another way, how much can I expect to lose if I chose the wrong method)? Answer: My primary reason for preferring the use Read more »
Lesson 22 – Does the Doctor Take His Own Medicine?
I am sometimes asked if I invest my own money the same way I invest client money. I’m afraid such questions usually elicit a sarcastic response such as: “Do you think a surgeon should undergo the same operations she performs?” Or “Why would I even invest for one client the same way as another, let Read more »
Lesson 13 – Stocks for the Long Run
Obviously, you cannot buy everything. Where would you put it? Also, not everything’s for sale. We need to limit our discussion, at least initially, to investments that are easy for the average person to make. We’ll begin with stocks. I can’t predict the future. I can, however, do a reasonable job of predicting the past. Read more »
Lesson 12 – Why Bill Gates Isn’t a Million Times Happier than You Are
Wealth has a diminishing marginal utility. This, in my view, is the most important argument, the one I stress with my clients when helping them plan their future. Even if the first two reasons (here and here) didn’t apply, an investment strategy designed to serve real lives mustn’t overlook this one: $2 is not twice Read more »