This will be the last post in 2013. So far this year this blog published 134 articles and received 1,250 comments (350 of which were my replies to readers’ comments). I didn’t track the total hours I spent on producing these 134 articles and 350 replies to comments. I think 200 hours would be very conservative. It’s probably more like 500 hours.
To my long-time readers, thank you for indulging me for another year. To new readers, thank you for finding my blog. I hope enough people find enough value in these articles and comments. That would make the 200-500 hours worth spending.
I put together a short survey just to get a feel where I’m doing well and where I’m doing poorly. There are only 4 questions. I appreciate a few minutes of your time to give me feedback.
2013 has been a great year for investments, especially the US stock market. S&P 500 went up more than 30%. US small caps went up even more. Depending on where exactly it finishes on Dec. 31, S&P 500 will have its 2nd or 3rd best year in more than 30 years (+32.6% year-to-date as of 12/27/2013, +37.6% in 1995, +33.4% in 1997). Most bonds are slightly down in 2013. TIPS and long-term government bonds are down more.
In terms of investing, 2013 is a bad year. If you are still young, the great year for investments came too soon. You see a year like 2013 whisk by before you have enough assets to really take advantage of it. If you are scared by 2008 and you dialed back your percentage invested in stocks to a low number, a large part of your portfolio missed the train. Years like 2013 don’t come often. By the time you realize, it’s gone.
2013 rewards imprudence more than sensible investing by the book. Everybody knows you shouldn’t be 100% in stocks. Yet 100% in stocks is exactly the way to go in 2013. In terms of the opportunity cost for safety in bonds, 2013 is the highest since 1978. Even when stocks were doing extremely well in late 1990s leading to the market bubble in 2000, the difference in returns between stocks and bonds wasn’t as high as in 2013 because back then bonds did much better than they did in 2013.
Everybody knows you shouldn’t buy stocks on margin. Yet buying the total stock market ETF on margin at 1.6% margin interest rate would be a great move in 2013.
Everybody knows you are supposed to diversify internationally. Yet any money invested in a total international stock market fund would see only half the return of a total US stock market fund. Emerging markets? Much worse.
Everybody knows you are not supposed to buy hot IPOs. Yet buying Twitter on the first day of trading at $45 on November 7 would soon see the price going above $70 not even two months later. Twitter was still $64 as of December 27.
For these reasons 2013 is a great year for investments but a very bad year for investing. It teaches all the wrong lessons. I hope 2014 will be better.
Happy New Year!
[Photo credit: Flickr user Kate Ter Haar]
Refinance Your Mortgage
Mortgage rates hit new lows. I saw rates as low as 3.25% for 30-year fixed, 2.625% for 15-year fixed, with no points and low closing cost. Check mortgage rates in your state.