In “Can You Get 7% Per Year in Income with Only Moderate Risk?” a blog I wrote back in the beginning of December, I analyzed a portfolio with 7% yield and “moderate” risk. My analysis suggested that it was possible to create a portfolio with 7% yield and about the same level of risk as a portfolio allocated 50% to a total market stock index (VTI) and 50% to a broad bond index (BND). My analysis also suggested that this portfolio had a projected volatility of 15% on a going forward basis. A helpful reader (see his comments by clicking on the article above and scrolling to the bottom of the page) found that this portfolio lost Continue reading
Wall Street has a bad case of the downers lately. With triple-digit drops in the Dow one day and double digit jumps the next many investors chose to take shelter on the sidelines as they pried open a bottle of Pepto.
The picture is not pretty: As of August 10th, investors could only stand back and watch as the S&P 500 Index continued a 20-day trading sell-off resulting in a 14% loss. So what does it mean and what should we do about it when the market as a whole suggests that the value of a broad index of U.S. companies is 14% less today than a month ago?