Category Archive

You Asked, So We’ll Answer   FOQ: (During a meeting…) Everything’s down – did you just say that’s good? Short: Yup. Long: Well, without down markets, we would not have much of an up market over the long run. Stocks have averaged about 10% forever. And that’s more than cash, bonds, commodities, CDs, gold and other metals, annuities, currencies, collectibles, and just about anything else. But for that long-term reward, we must absolutely experience some short-term suffering – that is, the manifestation of risk. Reward and risk are inextricably related. Anything said to the contrary is either a sales pitch …

With all the talk in the financial media about a “looming recession”, we thought we’d share some facts about them:   The definition of a recession: The National Bureau of Economic Research (NBER) is generally recognized as the authority that defines the starting and ending dates of U.S. recessions. They state that a recession is a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales. The “other” definition: In 1974, economist Julius Shiskin defined a recession as two consecutive quarters of …

You Asked, So We’ll Answer     FOQ:  Aren’t dividends from stocks a good way to generate income? Short: Nope. Long: Focusing on dividend paying stocks for income presents a bunch of issues: lack of diversification, tax inefficiency, timing of payments and size of payments.   FOQ: I’m guessing that’s bad, right? Short: Yup. Long: Diversification is a pillar of prudent investing. Yet only roughly half of global stocks pay a dividend. So loading up on them would cut your diversification in half, at least. And in our experience, those seeking dividend income tend to concentrate their holdings to 50 …

The saying “Risk equals reward” is incomplete on its own. For example, were you to say, “Risk equals reward, but not all risks are rewarded”, you’d be correct (that’s a topic for another time). Furthermore, there’s a time factor involved in the reward side of this simple equation. We’d say, “Risk equals reward. But you have to wait for it.” How long? You never know. And therein lies the risk. While we’ve recently hit new highs, the road to these levels has been peppered with periods of no growth, or no reward for the risk – periods that can make …