The current bull market that started in 2009 is the 3rd longest bull market in history. We’ve been in this state for 2,287 days (since March 6, 2009.) Moreover, during this period we haven’t seen a 10% correction for 968 days already (since August 4, 2011), which makes it the 5th longest period without a 10% correction. No wonder, many analysts and investors are getting nervous saying the market is overvalued and due for a pullback. [Read more…] about Seven Ways to Hedge Your Portfolio
There is an old trading adage that says “Sell in May and go away.” According to it, investors should close all equity positions in May, go to cash and get back into the market in November, thus avoiding a seasonal decline during summer and the first part of fall. However, the last three May months that still reside in my memory were profitable, obviously questioning if this concept is still valid. [Read more…] about Sell in June and Go Away?
While federal debt and budget deficit still remain within reasonable boundaries when compared to GDP, the tendency of these two fiscal metrics in absolute values continue to be worrisome. Some economists predict negative consequences if the trend continues unless the Government takes appropriate measures. One of such measures is to limit spending and optimize the budget. But it is easy said than done and seems unrealistic in the short and even middle-term. The other measure that the Government may consider or even be forced to do is to raise taxes at some point in time. However, this decision is not an easy one to make either. [Read more…] about 5 Legal Ways Investors Dodge Taxes
In my previous post, I analyzed the benefits of a Coverdell Education Savings Account and found out that it is a very powerful vehicle, despite its low $2,000 annual contribution limit. It can be used not only for elementary, middle or higher education, but for homeschooling as well, which makes it unique. In addition, the Coverdell ESA gives more flexibility in terms of investment choices, allowing you to invest almost in all stocks, bonds, and funds out there on the market. [Read more…] about A 529 Plan: A Good Vehicle For College Savings
How do you usually approach your investing? Do you solely focus on returns without giving due consideration to risk? Or do you put some efforts to figure out your investment objectives, preferences/constraints, and risk tolerance first? Well, if you are concerned with returns only then you are at a much higher risk than you think. Why? Because you may end up with a portfolio that is “stuffed” with high-risk investments and that is not compatible with your personality and goals. A sound investment approach should start with identifying your investment goals, understanding your risk attitude, and drafting a plan. [Read more…] about A Devastating Impact of High Fees on Your Account
Despite small but steady growth for the most part of the week, Friday’s selloff pushed U.S. indices into negative territory. On the week, S&P 500 lost 1% and broke two-week winning streak. Nasdaq 100 and Russell both closed the week in a negative territory, too, losing 1.3% and 1%. Corporate reports were mostly in line with analysts expectations, however, official guidance from some companies pointed out to weaker results in the future, also causing some pressure on stocks. Greece default fears and China tightening control over short-selling and lending to small investors were two main factor that significantly weighed on investors mood on Friday, triggering the selloff. Chinese market regulator attempts to stop emerging of a stock bubble and cool down an overheated market. Macroeconomic data released during the week was mostly in line with forecasts and estimates, except for jobless claims, which rose to 294,000 compared to 280,000 forecast. Conversely, retail sales increased for the first time in three months, +0.9%, and were pretty close to what analysts expected. As for consumer prices, they also rose for the second consecutive month and were in line with analysts expectations. Regarding awaited interest rate hike, Dennis Lockhart, the Atlanta Fed Reserve President in his speech on Thursday mentioned about “notably weak” Q1 data and hinted that the interest rate hike may be postponed.
The VIX Index finished the week higher, rising 10.4% to 13.89. Remaining below 15 signals that investors continue to believe that the market still has some room to go up and the long-awaited correction may be delayed. However, treated as a contrarian indicator, the “fear index” may signal right the opposite, a potential correction in front of us.