Why do people still care so much about the New York Stock Exchange? The Big Board is not so big anymore. This is one of a number of ongoing puzzles that vex me.
After several years of solid stock market returns, you may actually be less afraid of risk. Maybe you question your asset allocation and strongly consider more stocks and other supposedly riskier assets. When balancing the temptation of ballooning returns with prudent and tested patience, though, choose the latter.
Even though the predominance of domestic stocks has shrunk as other nations’ equities have grown in value, Americans continue to cling to investments from our own country.
Historically, stocks rise in anticipation of interest rate increase, because these hikes usually signify a healthy and expanding economy. That likely will be the case now.
Our central bank, once the institution that rarely spoke, now is verbose to the point that its governors don't seem to know when to shut up. Thus we now have an investment community permanently fixated on Federal Reserve policy as the key to everything.
Want to strike it rich by investing in a company before it goes public? You might succeed. Or you might just bomb out.
Rewarding shareholders with stock buybacks and dividend payouts, at the expense of capital spending, is very popular in corporate America. You can see its investor appeal – activist groups are continually pushing for these awards. But this trend is worrisome, dispensing goodies in the present instead of building for the future.
The psychological urge to move on is ingrained in the American character. As investors, this compulsion does us no favors when the stock market is hot and we chase the top performers, or when it’s plunging and we flee longstanding holdings.
China is headed for the dumper. So goes the negative chorus on the world’s second largest economy. Slowing growth, horrible air pollution, a real estate bubble – the reasons given for the country’s demise are numerous. But despite China’s woes, its prospects remain bright.
Since the financial crisis, when both stocks and bond prices took a pounding, the normal pattern returned: Stocks zig when bonds zag. That usually meant that trouble in the world tanked stocks and buoyed bonds, particularly Treasuries. Nowadays, though, stocks and bonds may end up trading places.