Monthly Archives: September 2013

Planning for College Costs, Part II

In part 1 of this article, I explored how you can estimate how much college will cost and how much you need to save, going forward, to accumulate enough savings to cover the amount that you plan to contribute towards your child’s college costs.  One of the major variables in this calculation is what you assume about how you will invest the money that you save.  While you can design a portfolio yourself, it is also worth looking at funds that combine the major asset classes into portfolios at various risk levels.  Continue reading

Planning for College Costs, Part I

As we enter autumn, the leaves start to change and students arrive at college campuses across the country.  For parents, as well as for students, the start of the academic year raises the specter of some of the largest costs that a family incurs.  Hopefully, families have started to prepare for college costs far ahead of the years of attendance, but the sheer size of the expenses may be pretty daunting even for those who have saved since their children are very young. Continue reading

Is It Worth Betting on the ‘September Swoon’?

People have an understandable interest in patterns in stock market returns.  As we head into September, we can expect the inevitable articles about the so-called ‘September swoon.’  If you look at the period since 1926, the average return in September has been negative.  A 2011 paper in the Journal of Applied Finance concluded that the historical occurrence of negative returns for the stock market in September is so strong and consistent that it cannot easily be explained away.  There are a range of other so-called ‘calendar effects’ in which a specific time of the year, month, or week has historically delivered returns that are markedly different from the average across all periods.  There are no conclusive explanations for these effects and, in a rational world, these types of anomalies should not persist—but they do.  If they expect stock prices to decline in September, savvy speculators should start to sell in August in anticipation of this drop and this selling should dilute the eventual drop in September.  Over time, this type of effect should, in theory, disappear to investor anticipatory buying or selling.  Nonetheless, these effects remain prominent in historical stock prices. Continue reading