Cheers, John, Bill, Mark & Melanie
The Sky Is Falling! – Special “FOQ” Edition
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 …
All About Recessions
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 …
Frequently “Oaked” Questions
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 …