For a long time, many of our portfolios have had a slight bias towards small cap stocks (stocks with a total market value under two billion dollars). Sometimes this bias helps performance and sometimes it hurts. We believe that over the long term, in exchange for a small amount of additional risk, small cap stocks will provide better returns than their large cap counterparts.
Don’t put all your eggs in one basket. I have no idea where that idiom originated from but it is perhaps the best and simplest way to describe diversification. Instinctively investors know they should diversify their portfolio and most do this. Having looked at hundreds, if not thousands, of portfolios, I can tell you that diversification amounts to more than just owning multiple funds. A common mistake that investors make when trying to diversify their IRA or 401k is that they, inadvertently, create a portfolio that has the illusion of diversification. Let me explain.
On January 18th, we initiated a gold position in many of our portfolios. As many of you know we are not flashy day traders. On the contrary, our investment approach has a long term outlook, is disciplined, and is built on the fundamentals of asset allocation. With that being said, we do not take a purely static approach to investing. We believe that adjustments over time are prudent and this change represents what we believe to be a prudent investment...
Well, that was a year to remember! I won’t spend too much time talking about 2020 as we are all looking forward to moving on. However, it may be worthwhile to do a short recap of what happened to markets and how they concluded in 2020.
Socially responsible investing (SRI) is a general term used to describe various subsets of investing that attempt to align your portfolio with your values. There are two categories that tend to be the most popular: ESG (Environmental, Social, and Governance), and BRI (Biblically Responsible Investing).
The second quarter of 2020 will make history as will the first quarter albeit for different reasons. As we all painfully remember the Q1 marked nearly unprecedented volatility in the markets as the world dealt with the unfolding news of Covid-19. The S&P 500 plummeted to its lowest when it fell 33% from its high in less than 5 weeks. Beginning near the end of Q1 and sprinting straight through Q2 the market has come roaring back.
I can understand and appreciate the overwhelming list of tasks that a business owner sometimes has to accomplish. Perhaps on that list there may be the task of setting up a retirement plan for employees. There are three retirement options employers could consider implementing, depending on what they are hoping to accomplish, Payroll Deduction IRA, Simple IRA, or 401(k).
"It is all but certain that we are in a recession. The data is not out yet, but I would be very surprised if we are not in a recession. A recession is defined as two consecutive quarters of negative GDP growth. We all know that half the country was shut down for much of the first quarter and even more of the economy has been shut down for the second quarter."