Investing

Why Is October Bad for Stocks?

Historically, October is the weakest period for stocks, which we have witnessed firsthand, yet again. The huge crashes of 1929 and 1987 happened during the 10th month. Why? There are several reasons, ranging from regularly occurring events to plain bad luck that for some reason lands this month.

401(k): Safety in Allocation

Peaks and valleys of the market probably give you fits about your investments in retirement savings accounts. Nobody can tell when Wall Street’s ups will peak and its lows bottom out, but you can protect yourself with patience and a cool head.

A Strong Dollar’s Impact

Among all the ebb and flow of financial news, what is important and what isn’t? Definitely important: the dollar’s rise. This doesn’t easily lend itself to TV visuals, but it should have a big impact on investors.

Investing to Cut Taxes

After the headline risks of the market and inflation, taxes present the biggest obstacle to your building wealth. Your best investment strategy seeks to not only generate returns on your capital but also to save as much of your money as possible to keep it working for you. One of the surest ways to preserve your capital: Reduce your taxes on investment income and gains.

Here are some strategies.

Misguided 401(k) Asset Mixes

People often have lousy asset allocation in their retirement plans. Overdone risk avoidance and other behavioral tics combine to ensure they probably will not create the wealth they need to retire comfortably.

Here is a conversation I've had too many times: An acquaintance says proudly that he invests the maximum into his 401(k). I ask what allocation he's made between equities and bonds. He says he just divides his contributions equally among the four investment choices the plan offers. I cringe.

Curbing Interest Rate Shock

What are the best bond investing strategies for retirees amid rising interest rates? There are two. I like to call them the “stuff in between” strategies, because they fall between bonds (whose values are vulnerable to rates increases) and stocks (usually not affected).

As the economy gradually recovers, the Federal Reserve keeps hinting at increasing rates. While higher rates are not a bad thing for retirees who invest primarily in bonds, traveling into that territory can be treacherous, and calls for some careful planning.

Stewardship and Your Money

What traits of the wealthy make them good at managing money? That question assumes a direct correlation between your wealth and your skill at managing that wealth. Wrong idea.

Better to ask, “What are the traits of someone who is a good steward of wealth?”

The Real Interest Rate Worry

Should we fear rising interest rates? Even the thought of them throws the stock market into a spin. The real problem with climbing rates, though, is that they will make servicing the out-of-control federal debt even more expensive.

For most investors, the focus is on what damage higher rates may inflict on stocks. There has been much market panic of late over the possibility that the Federal Reserve will raise rates sometime in the not-too-distant future.

What Great Rotation?

The epic bond rally that began in the early 1980s seems about to end, as the Federal Reserve eyes raising interest rates. So investors keep hearing about a so-called Great Rotation out of bonds into stocks. Well, it’s not happening, due to lingering leeriness about equities after the horrendous market slide that the financial crisis created – memories that this month’s slide have reinforced.

Money Lessons From Baseball

As you cheer your team in this year’s World Series, consider that America’s favorite pastime can teach you a lot about America’s main preoccupation: money.

How does baseball resemble your investing or financial decisions?

1.      Probability of outcomes matters, whether concerning stolen bases or investment returns and financial goals.

2.      Separating a manager’s skill and luck takes a long time.

3.      A quality process matters more than immediate or short-term outcomes.

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