Tag Archives: Wall Street Journal

Retirement: Demographics and Destiny

In a recent interview in The Wall Street Journal titled “Bad New for Boomers,” Rob Arnott presents a fairly grim view of the retirement income that investors can expect to generate from their investment portfolios.  His thesis is that aside from all of the economic turmoil that may constrain future earnings growth, there is an additional substantial problem for investors: supply vs. demand.  As the Baby Boomers retire, they will become sellers of equities as they draw down their life savings to provide retirement income.  Having this huge generation steadily cashing out of the market, will increase the balance of sellers vs. buyers of equities and will thereby drive down equity prices.

It is crucial for investors to understand that Continue reading

“A Little Late” by Carl Richards

Carl Richards’ is a favorite contributor here at the Portfolioist. We’ve interviewed him in the past (see, “How to Pick an Investment Advisor (Part 3): Carl Richards’ 3 Key Questions” by Nanette Byrnes) and remain a fan of his website, behaviorgap.com.

Using a Sharpie and a piece of card stock, Richards captures complex financial ideas in simple, easy-to-understand sketches.

Here’s his latest sketch and commentary on the recent market volatility. Enjoy–we certainly did. Continue reading

The Changing American Workforce: Can They Still Retire?

The Wall Street Journal recently published the article, “What’s Wrong with America’s Job Engine?” which talks about the changing relationships between employers and workers in the wake of the recession. The article suggests that companies have not ramped up their hiring in the ways that many expected.

The first thing that really jumped out at me was that over the past ten years, the U.S. economy’s output of goods and services increased by 19% —but the number of private sector jobs —declined by almost 2 million. Sure, part of the decline in jobs can be blamed on the recession, but David Wessel, the article’s author, notes that much of the shift is due to long-term changes in the U.S. job market—meaning that American business is looking to do more with less. Continue reading

Do Performance Claims Really Add Up?

Jason Zweig, well-known author of “The Intelligent Investor” column at The Wall Street Journal, recently checked out the claims of market-beating performance in marketing materials from a range of market commentators.

For example, Jim Cramer’s newsletter was reported by Zweig as stating that his stock picks generated returns more than twice the performance of the S&P 500 Index from Jan 1, 2002 to April 1, 2011. Over this period, the newsletter described Mr. Cramer’s performance as generating 39.2% vs.15.5% for the S&P 500.

Mr. Zweig noticed, however, that in Mr. Cramer’s performance comparison, the returns cited for his stock picks included dividends, while the returns cited for the S&P 500 Index (over the same period) did not. Continue reading

Individual Investors Dip Toe Back into Stocks: Wall Street Journal Warns Top May Be Near

The “dumb” money (ie. that of individual investors) is back in the stock market — and that means the market likely is at its peak, according to the Wall Street Journal. The evidence: rising investment in ETFs and equity mutual funds, as tracked by EPFR Global. The American Association of Individual Investors (AAII) also found a striking growth in bullish sentiment when polling its members last week (graphic courtesy of the WSJ): Continue reading

Is Indexing the Answer to Herd Investing?

That investors buy at the top and sell at the bottom is a sad truth that has been well-established as typical financial behavior. A column in today’s Wall Street Journal raises the question: what should investors do about that?

The usual answer is to argue for indexing — if we “can’t” beat the market, we might as well join it. But the Journal’s Brett Arends says the better answer is to bet against the herd: when the market is going up, get out. When it’s going down, buy. Continue reading

John Bogle on Morningstar and Costly Funds

John C. Bogle is without a doubt one of the most listened-to experts on mutual funds in the world. And he should be.  Having created the massive Vanguard fund complex and written eight books on the topic, the depth of his knowledge is unmatched.

Bogle was maybe the first, and has consistently remained for decades, a staunch advocate for low cost mutual fund investing.  Friday in the Wall Street Journal, he weighed in on Morningstar’s recent findings that low cost is the best predictor of a mutual fund’s outperformance, better than its own star system. Continue reading