When to Sell an Investment

I’m often asked when the right time is to sell an investment. There are actually two answers — a logical one and an emotional one. Let me explain by illustrating through one of the lessons in a course I teach. I teach behavioral finance to CPAs (and confess I am one). I give the class the following situation and then poll them on what they would do: You have been gifted $10,000 and decide to buy two stocks with it. …

How to Beat the S&P 500 Index

I’m going to try to mislead you, but it’s for a very good reason. What I have for you is a U.S. stock fund that not only has beaten the S&P 500 index, it’s nearly certain to continue doing so in the long run. For now, I’m going to call this mutual fund the Super-Secret Fund, or SSF for short. Looking back over 20 years, you can see that the SSF trounced the S&P 500 index. Not only did it …

Can Indexing Become Too Big?

For some time now, actively managed mutual funds have been underperforming index funds that essentially own shares of all the stocks in the market. That’s because the lower costs of index funds give them huge advantages over the high-priced active funds. Though I’ve been investing in index funds for decades, I’m rather surprised by their more recent popularity. My indexing approach was once rare, but now a full 37 percent of the money in U.S. stock funds is in index …

6 Lessons From the 6-Year-Old Bull Market

Six years ago today, the Standard & Poor’s 500 Index closed at 676.5, which represented a 56 percent decline in less than 18 months. Many a shell-shocked pundit predicted then that the bloodbath was not over, such as this article warning that it would take eight years to recover, possibly longer. Harry Dent’s book The Great Depression Ahead was a best-seller, GM was flirting with bankruptcy, and cash was viewed as the only safe haven. It was a very scary …

Four Money Resolutions for Building Wealth

It’s been another good year for investing, but only if you’ve been doing it right. U.S. stocks are up 14 percent this year as of Dec. 26, on top of a 33.5 percent gain last year, as measured by the Vanguard Total Stock Index Fund ETF (VTI). If you want to do it right in 2015, and maximize the chances of growing your wealth, now is the perfect time to make some New Year’s resolutions. Repeat after me…. I will stop making …

Will There Be a Santa Claus Market Rally?

Since 1950, December has proven to be the best month for the stock market. According to MoneyChimp.com, the S&P 500 has turned in an average gain for December of 1.62 percent, outpacing any other month. So far this December, Santa has left nothing but coal in the stock market’s stocking, with the S&P 500 losing more than 65 points, or about 3.77 percent, through Dec. 15. Not exactly anyone’s idea of a rally. >> 5 Bad Investment Moves No need …