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Know Thyself: How Your Needs Will Steer Your Decisions

  Step 1: What Do I Need to Consider Before Investing? There are four basic aspects that compose your personal investment profile: Your personal tolerance for risk Your return needs and whether you need to emphasize current income or future growth Your time horizon Your tax exposure Each aspect of your personal investment profile will affect the trade-offs you are willing [...]
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Don’t Fight the Fed: Interest Rates and Their Impact on the Stock Market

Where does the economy, and the stock market, stand today after the combined actions of the Federal Reserve and Treasury? In the 60 weeks from the start of 2008 through the end of February 2009, the S&P 500 fell in price 60% of the time, as compared with an average 45% in the preceding 10 years. Yet the S&P 500 rose in six straight weeks from March 9 until April 17 this year. What a relief. However, investors continue to ask, “When will this bear market end?,” with the intention of simply waiting until the fundamentals start to improve before getting back into equities. While this mindset might serve investors well in the near term, it might also cost them in the longer term. Since 1949, bear markets bottomed a median of five months before recessions have ended and eight months before corporate earnings hit a trough and unemployment peaked. And while history is never a guarantee, it often serves as a guide. Why should one even consider the early March low as a possible turning point in this bear market? Because bear markets don’t last forever, and investors clearly should remember how strong the advances can be in the first year of a new bull market: The average gain for the S&P 500 in the first 12 months of a new bull market since 1932 was 46%. While it may be prudent to look upon this recovery with a skeptical eye, investors should acknowledge that sooner or later a new bull market will emerge.
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Sell in May and Go Away: Fact or Fallacy?

Where is the stock market heading? Has the rally that started in early March been exhausted? These are the key questions on all investors’ minds as financial markets remain caught between the frantic actions of central banks to get the cogs of the credit system and economy turning again on the one hand, and a [...]
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