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 […]
Latest Blog Posts
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 […]
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 […]
Living with Negative Real Interest Rates
Reader KD asked me to comment on the repercussion of interest rate on savings being lower than inflation because the Fed is holding the short-term interest rate close to zero. It has been this way for several years now. The same thing happened in early 2000s when the Fed cut rates and held them too […]
Mysterious Check In the Mail
I owed a friend some money for some shared expenses. I used Fidelity’s online bill payment service to pay him because he doesn’t have a PayPal account and I was too lazy to find an envelope and a stamp. A few weeks passed and I still don’t see the check hitting my account. Fidelity uses […]
Beware: Banks Auto-Renew CDs with a Short Window to Back Out
Many banks automatically renew matured CDs. You’ll pay an early withdrawal penalty if you miss the short window to back out. Watch out for the trap.
A High Credit Score Is Not Necessary for the Best Loan Rate
My mortgage refinance is almost done. I will sign the docs this week. Long story short, I’m refinancing from a 15-year fixed at 3.75% to a 5/1 ARM at 2.625% with a negative $900 closing cost. It’s a great rate. Getting paid to do it makes it even better. As part of the disclosure, the […]
Irrational Sensitivity to Gas Prices
Speaking of inflation, I noticed that people have irrational sensitivity to gas prices. Warehouse club Costco stores in my area also sell gas. The price is usually a little cheaper than the price at other gas stations. I can tell by the length of the lines how much cheaper it is. If it’s five cents […]
Fitness Trainer and Financial Advisor
In a previous post Pay Someone to Enforce the Discipline, I compared fitness trainers to financial advisors. "I’m pretty sure [the trainees] can get exercise routines off the Internet and do the same exercises on their own. Are those people foolish in paying good money for nothing?" Peter Sagal is the host of NPR’s new […]