Wall Street Journal columnist Jason Zweig wrote a puzzling article Why Buying on the Dips Isn’t All It’s Cracked Up to Be. The gist of it is that buying on the dips doesn’t work. I find the article puzzling because it has a weird definition for buying on the dips. It defines a dip as […]
Latest Blog Posts
Market Timing: Criticisms From John Bogle
In the previous post Market Timing vs Conservative Portfolio I explored a possible valid reason for market timing. Proponents say that market timing isn’t so much for enhancing returns but for reducing risks. Although market timing underperforms the market, an investor with low risk tolerance would invest in a conservative portfolio anyway, which also underperforms […]
Market Timing vs Conservative Portfolio
After listening to Paul Merriman’s Sound Investing podcast, I found out that Paul Merriman does both indexing and market timing. He said of the $1.5 billion his company manages for clients, about 15% are invested in market timing strategies. That’s quite peculiar. Usually people who follow indexing believe in market efficiency, which says it’s unlikely […]
Save Aggressively, Invest Conservatively
Now we know the story that retail investors run for the hills whenever the stock market hits turbulence is largely a myth. Even during the serious financial crisis in 2008-2009, only 7% of the money invested in stock mutual funds were sold out of those mutual funds. However, even though most investors don’t sell, they […]
Most People Don’t Sell Everything In a Panic
Speaking of not selling, I find this tidbit quite interesting: the vast majority don’t sell anyway. Steve Utkus, Director of Center for Retirement Research at Vanguard, wrote in the Vanguard Blog that during the recent volatile days, between Aug. 1 and Aug. 10, only 2% of all 401(k) participants in plans administered by Vanguard made […]
+/- 5% Rebalancing Bands
When the stock market moves up or down, it can knock your asset allocation off your target. Rebalancing means selling the winners and buying the losers in order to bring a portfolio back to its target allocation. When it comes to rebalancing a portfolio, the 5%-band method is a popular one. It says that you […]
Don’t Sell, But Don’t Buy Either?
When stocks are down, don’t sell. But also remember to buy more. “Don’t sell” is correct only if “buy more” is correct.
Buying Stocks On Sale
I was away for only a week, and look at what happened. After I came out of my seclusion, I heard we beat the clock on the debt ceiling but Treasurys got downgraded anyway. I was surprised to see that my limit buy orders were all filled last Thursday and Friday even though I didn’t […]
Taxes Will Go Up Does Not Mean Tax Rates Will Have to Go Up
Ever since I wrote The Case Against Roth 401(k), I have people telling me I’m out of my mind. They say taxes have to be higher in the future because of deficits, baby boomers retiring, higher health care costs, etc., etc. I don’t necessarily disagree that taxes will be higher in the future. After all, […]
Are Convertible Bonds and Preferred Stocks Good Investments?
A reader sent me this question about convertible securities mutual funds. I would love to read your opinions on convertible securities mutual funds. This is a subject that seems to be ignored completely by personal finance bloggers. What I would like to know is How do these funds work and is there an interest rate […]