“It is an extra dividend when you like the girl you’ve fallen in love with.” –Clark Gable If the late great actor is correct, then he found a use for dividends, at least in love. The dividends in your investment portfolio, on the other hand, are quite useless, contrary to popular beliefs. Those popular beliefs are: that dividends increase returns, and that dividends are a sound income strategy. We’ll debunk both, to prove our assertion. First, a simple example of how a dividend works, to explain the return issue: John owns a share of stock in Company A, which is …
Why Your Advisor Should Be a Fiduciary: An Example
Fi·du·ci·ar·y (noun): an advisor who chooses to be held to the highest standard of the law such that he or she must do what is in their client’s best interest at all times. In other words, put the client first. Period. Not sometimes. Not sort of. Just first. It’s hard to make a case for anything but. Would anyone prefer not having their advisor do what’s right by them? Yeah, it wouldn’t make sense to us either. Yet after countless lawsuits, hundreds of Ponzi schemes, ages of jailtime, and a decent effort by the government to make positive changes (effective …
2016: Year in Review
Record Start, Average Finish But not a good record. The first two weeks of 2016 marked the worst start for the S&P 500. Ever. The entire month of January was the ninth worst since 1928. For some of you, a root canal may have been preferable. And it wasn’t just the S&P 500; it was all stocks across the globe, of all sizes. Fast forward to mid-year, and the United Kingdom votes to withdraw from the European Union – an event known as “Brexit”. More turmoil, though not as bad as January. History tells us that the stock market as …
The Folly of Forecasting
“The ability to foresee that some things cannot be foreseen is a very necessary quality.” The French philosopher Jean Jacques Rousseau probably didn’t know how relevant to investing his words were. But over 250 years after he wrote them, a client reminded us of Mr. Rousseau’s genius when that client sent us this, back in August: This is a Goldman Sachs forecast, issued in early August. Our client was very nervous that Goldman Sachs believed the stock market would be down 8.8% over the next three months. Fast forward… The sun is shining, our client is happy, and, despite the …