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Why Contrarian Investing Still Works

Being a contrarian investor is a lot harder than it sounds. It means doing the opposite of the crowd. It means having the stomach and stamina to buy assets or investments that are unloved, misunderstood, and trading at bargain prices. Highly respected investors who made their fortunes by being contrarians include David Dreman, Sir John …

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The Right Context for Active Management

Actively managed portfolios are not a device of nefarious origin. And neither is it a “dead exercise” as the vox populi has declared. Nevertheless, to be successful at active investing, there are some big time hurdles. Before we discuss these obstacles, let’s first clarify the term “active investor.” An “active investor” is somebody who is …

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How to Use Single Country ETFs

Among the greatest breakthroughs that exchange-traded funds (ETFs) have made is giving people complete control of their investment decisions. On one hand, a person may want to obtain very broad and diversified exposure using just one ETF, that may hold thousands of securities. To replicate that type of portfolio security by security would be both …

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3 Diversification Errors

Portfolio diversification is an investment strategy designed to limit risk by spreading money across multiple asset classes and securities. Most financial literature along with your local financial advisor will agree that diversifying your investments is a prudent thing. But while diversification may seem like a straightforward process, it isn’t. And some investors and their advisors …

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5 Building Blocks for Your Investment Portfolio

The difference between well-built and poorly designed buildings can be strikingly drastic. Take for example, I.M. Pei, the Chinese-American architect, who is a legend in his profession and has won many prestigious awards, including the Pritzker Prize. Among all the illustrious structures he’s designed, the Rock and Roll Hall of Fame in Cleveland, OH is the …

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How to Hedge in a Rising Market

Hedging, for some investors, sounds complicated. In reality, it’s not because it’s all about reducing investment risk. Who can’t understand that? Sometimes stock prices go up, sometimes they go down. That’s how financial markets work. But over the past 8 years, stock prices have enjoyed consecutive yearly gains by making one all-time high after another. How can …

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Is Sector Performance Following History?

It’s been said the more things change, the more they stay the same. And right now, the performance of stock market industry sectors is behaving right in line with that view. During the first quarter, the total U.S. stock market (NYSEARCA:VTI) rose almost 6% in value. Driving the stock market’s strong start has been bullish momentum …

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What to Do About Fading Stock Market Momentum

Wall Street has been so busy with one all-time high after another, many have already long-forgotten that it’s  been over one-year since the stock market corrected by 10% or more. But as the great poets say, “we don’t remember the days, we only remember the moments.” (Audio) Are ETFs turning people into day traders?  At this …

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Is Style Drift Increasing Your Financial Risk?

Do you own mutual funds? If you do, there’s a hidden trap called “style drift” that could be increasing the risk of your investment portfolio. How does style drift happen? Style drift occurs when the fund’s portfolio manager begins to deviate from the fund’s investment objective. For example, a mutual fund that is labeled and categorized as …

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Portfolio Rebalancing: Should You Do It?

Everything in life that surrounds you requires maintenance. This includes your home, your automobile, the software application on your mobile device, and even your health. Unfortunately, your job for maintaining stuff doesn’t stop there. Why? Because your investments – whether they are held in taxable accounts or tax-deferred retirement accounts like IRAs, 401(k), and 403(b) …

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Tough Financial Questions that Require Honest Answers

With 2016 now officially history, a new year is upon us. And the great part about each new year is the opportunity for a fresh start. But before completely ignoring or forgetting what happened in 2016, the beginnings of a brand new year offer more than just a clean slate, but an opportunity for all …

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Factors that Should Influence Your Investments

If you asked a thousand different people about the key factors that should drive their investment choices, you’re bound to get a thousand different answers. Some, for example, might be inclined to argue that U.S. stocks (NYSEARCA:SCHB) have increased for eight consecutive years and there’s no reason to make any portfolio changes because stock prices …

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How Safe are Bonds?

News flash: Investors who assumed their investments in conservative bonds and bond funds (Nasdaq:LSBRX) were safe from losses are learning otherwise. Since mid-2016, the performance for U.S. bonds (NYSEARCA:BND) with top credit grades have sunk almost 4%. For perspective, the 12-month yield on ETFs tracking the Barclays U.S. Aggregate Bond Index is just 2.40%. Put another …

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A Guidepost for Investing in “Smart Beta” ETFs

Over the past several years traditional market cap weighted indexes have been derided. Why? Because upstarts, known as “smart beta” have taken the ETF marketplace by storm and are trying to dislodge traditional indexing . And one of the oft-repeated arguments against traditional indexing that you’re guaranteed to read about or see is something like, …

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3 Risks that Could Derail Your Retirement Plan

Funding your retirement is a big financial obligation that no one can escape. How big? While other expenses like paying for college education or a home are also large, they aren’t necessarily in the same league. Why? Because buying a home or paying for a family member’s education isn’t something we necessarily have to do. …

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A $1.3 Million Portfolio Report Card for JPG in Maryland

What are the hallmarks of a well-built and financially sound investment portfolio? For some, it’s simply owning the top performing stocks or mutual funds (Nasdaq:AMCPX). For others, it’s owning the funds or ETFs (NYSEARCA:SCHB) with the lowest cost. And yet for many others, their definition of a well-built investment portfolio is to own whatever securities popular …

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Risk and Volatility: Know the Difference

On financial networks and in finance classrooms around the globe, stock market volatility is routinely mis-classified as “risk.”  Unfortunately, this erroneous view causes people to make investment mistakes. Elroy Dimson, a London Business School professor once wrote, that risk “means more things can happen than will happen.” It’s an eloquent way for describing risk, which …

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Is Your Portfolio’s Performance Satisfactory?

What’s your investment portfolio’s performance? Do you know? Just 57% of U.S. adults are “financially literate,” according to a study from Standard & Poor’s titled the “2015 Global Financial Literacy Survey.” Another study by a large insurance company found that people are more frightened by planning their finances than dying.  What’s wrong? Part of the problem …

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Your Investment Portfolio’s Missing Piece

The framework for an architecturally sound investment plan is to have a core portfolio built upon core asset classes. Like the foundation of a building, your portfolio’s core must be built on a solid and stable footing. While there are many things within your investment plan that are optional, this isn’t one of them. Before …

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This Multi-Trillion Dollar Freight Train is Due for Arrival

This year’s presidential election has been so drenched with public bickering and controversy, it’s left very little airtime for the multi-million freight train that’s on course to crash everybody’s party: U.S. public debt. In July, the Congressional Budget Office (CBO) reported that federal debt held by the public skyrocketed to 75% of U.S. GDP compared to …

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