margin of safety

Your Market Correction Checklist

“It’s wise to remember that too much success in the stock market is in itself an excellent warning,” once quipped Gerald Loeb. After nine consecutive yearly gains, it’s fair to say that our generation has enjoyed more than its fair share of stock market success. But someday very soon, a stock market correction will happen. …

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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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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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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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Are You Still Investing Without a Margin of Safety?

In retrospect, Brexit turned out to be more meaningful than Grexit. And while the immediate reaction of global financial markets (NYSEARCA:VT) to the England’s decisive vote to leave the European Union (EU) was negative, it’s a stark reminder of why investing without a margin of safety is negligent. With the exception of precious metals (NYSEARCA:GLTR), mining …

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If You’re Not Preventing Stock Market Losses, You Better Start Now

What’s more important? Making gains in the stock market or preventing losses? Before answering that question, let’s list a few common fallacies about risk: • The full spectrum of market risk can be accurately defined in a single magic formula or statistic • Long-term investing always guarantees success, so go ahead and take all the …

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Rising Stock Market Volatility, A Sign of the Times

Stock market volatility ain’t what it used to be. And unlike recent years, the VIX, a benchmark of volatility in S&P 500 stocks, (NYSEARCA:VOO) has been consistently up in 2016. The chart below illustrates how market conditions and stock market volatility or VIX (ChicagoOptions:^VIX) have dramatically changed over the past 52-weeks. (Audio) Stress-Test Your Investments Now + It’s Not a Bear …

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Don’t Count on the Fed to Backstop Your Investments

Yes kids, stock prices can sometimes plummet. And they did during the first trading session of 2016. It’s a helpful reminder to forgetful innocents about this unforgiving fact. The chart below shows how the SPDR S&P 500 ETF (NYSEARCA:SPY) has declined 1.65% over the past month. That in itself isn’t disastrous, but stock market volatility (ChicagoOptions:^VIX) …

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4 Things to Understand about Your Portfolio’s Margin of Safety

Does your portfolio have a margin of safety? I ask that question because the total U.S. stock market (NYSEARCA:SCHB) has been rocky over the past few weeks and now has a year-to-date (YTD) loss of -1.23%. And since most investor underperform the stock market and the index ETFs tied to it, it’s fair to assume …

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Stock Market Pit

Wall Street’s Perennial Optimists Strike Again

It’s been said the only bubbles that Wall Street sees are the bubbles in its champagne glasses. It appears those words are true because year-end targets for the S&P 500 (SNP:^GSPC) by Wall Street’s finest – are shall we dare say – quite bubbly: Bank of America 2,200 Goldman Sachs 2,100 Morgan Stanley 2,275 JPMorgan 2,250 Stifel 2,350 …

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4 Signs Your Portfolio Isn’t Ready for a Bear Market

In case you didn’t get the memo, global stocks are now in correction mode. And the velocity of the rout has been shocking to seasoned financial pros not to mention the investing masses. For perspective, the three largest U.S. stock benchmarks – the Dow Industrials (NYSEARCA:DIA), Nasdaq-100 (Nasdaq:QQQ), and S&P 500 (NYSEARCA:VOO) are up between …

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Portfolio Exam: A Hyper-Aggressive $1.29 Million Portfolio with Flaws

It’s commonly and incorrectly presumed that people with large investment portfolios are smart investors. But as counterintuitive as it may sound, this false presumption is simply not true. How do I know? Because I’ve analyzed and graded many multi-million dollar investment portfolios ($27 million is the largest one I’ve graded so far this year) using …

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(Podcast) The $700 Million Man Who Lost His Fortune

What’s hot and what’s not? The chart below shows that U.S stocks (NYSEARCA:SPY) are still outperforming other asset categories like bonds (NYSEARCA:BND), global real estate (NYSEARCA:RWO), and gold (NYSEARCA:GLD) this year.  Stock market fear is contained and the VIX – a popular barometer of sentiment –  has declined around 30% year-to-date. In terms of S&P 500 industry …

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Does Your Portfolio Have a Margin of Safety?

Building an architecturally sound investment portfolio doesn’t happen by chance. A structurally strong and healthy portfolio is organized into three basic parts: 1) the portfolio’s core, 2) the portfolio’s non-core, and 3) the portfolio’s “margin of safety.” All portfolio parts complement each other by deliberating holding non-overlapping assets. (Audio) $1,000 Gold? + a $1.8 Million Portfolio …

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Portfolio Chart 1

3 Ageless Lessons for Nasdaq 5000

Back to the future! The Nasdaq Composite Index (NasdaqGIDS:^IXIC) just crossed 5,000. Other stock market yardsticks like the Dow Jones Industrial Average (NYSEARCA:DIA) and S&P 500 (NYSEARCA:VOO) sit atop multi-year highs too. Everything that is old and worn out is suddenly new and exciting. (See skinny jeans and venture capital.) All of us are 15 …

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