Articles Article Archive
2011
August 2011
Implications of the Debt Downgrade
By Don Edwards, CFA
Equity markets around the world reacted negatively and strongly yesterday to the downgrade of U.S. Government debt. There was little change in bond pricing, although that could change in the future. As investors, it is important to understand why this happened and what it means for the capital markets.
February 2011
How Safe Are Bonds?
By: Don Edwards, CFA
When the stock market starts dropping, investors normally turn to bonds for safety. While bonds normally perform very well during stock market drops, there are times that bonds carry a lot of risk. While most well diversified portfolios should have an allocation to bonds, it is important to understand what makes bonds do well and what makes them do poorly.
The Longevity Risk
By: Ginger Scott, ARPS
In addition to the usual risks facing investors – inflation, market risk, economic risk, and so on – there is a new risk to confront. Actually, it’s not new, but investors and financial advisors have given it a name: the longevity risk. The longevity risk is the good news/bad news that modern health care has extended the average life span, but the result may be to put many people on the path of outliving their retirement savings.
Can Volatility Affect Your Investment Outcome?
By: Wabash Capital Investment Committee
A newly published book called The Investment Answer, by Daniel C. Goldie, CFA, CFP and Gordon S. Murray, does a wonderful job of simplifying some of the most complicated concepts in investing. We are fans of the book, and if you would like to read it you can purchase a copy here. The authors make clear the advantages of hiring someone to advise you with your investments, and we were glad that they voiced a preference for hiring an investment advisor like Wabash Capital over nationally-branded brokerage firms.
2010
November 2010
How to Become a Successful Investor
By: Don Edwards, CFA
Not everyone is a good investor. Like most endeavors in life, some people are better than others when it comes to achieving investing success. What makes a successful investor? People define success in different ways, but I define a successful investor as someone that accomplishes their investment goals, which, for most people, is to live a certain lifestyle without worrying about running out of money. Over the twenty years I’ve spent in this business, I’ve seen plenty of good investors and, unfortunately, I’ve seen my share of bad ones also. In trying to summarize the good traits, I can say this:
Getting Full Benefit from Your 401k
By: Ginger Scott, ARPS
About 47 million Americans are taking advantage of a 401(k) account through their employer, according to the Investment Company Institute, to the tune of over $2 trillion in assets. But to get the most "bang for your buck" -- whether you have not yet invested or have been doing it for some time -- it helps to know a few key strategies, as well as a bit of background into why 401(k)s are so useful.
Market Commentary
By: Wabash Capital Investment Committee
This year, our clients have asked us more about gold than any other asset class. It’s easy to see why. Over the past decade, gold has risen nearly five times. Since collapsing in price during the credit crisis in 2008, gold recently has risen to new highs above $1,300 an ounce. Gold investors hammer the table that buying gold is the only reasonable action to take in the current environment where the Federal Reserve is actively printing money. Their well thought out argument suggests all of these new dollars flooding our economy will eventually lead to hyperinflation, driving gold and other commodity prices sky high.
August 2010
Investing for the Long Term
By: Don Edwards, CFA
There are a lot of different ways to invest money. Some people like to gamble and go for quick riches while others want to make sure their money is very safe. Some like stocks while others like bonds. I have heard people swear that the only good investment is gold and other people swear that farm ground is the answer. Blue chip stocks, tech stocks, emerging market stocks, real estate, high yield bonds, and certificates of deposit; there are many options when it comes to investing your money. To some, the many different options lead them to do nothing. Others endlessly chase one hot investment after another, never achieving much but always on the lookout for the next big thing.
To Roth or Not to Roth?
By: Ginger Scott, ARPS
Starting in 2010, more people can convert their Traditional IRAs and eligible workplace plan
account assets to Roth IRAs, and for 2010 conversions only, spread the tax cost of the conversion over two years. This is a result of a provision of the Tax Increase Prevention and Reconciliation Act of 2005 (TIRPA). Specifically, the Act does the following:
- Remove income limitations on conversions to Roth IRAs
- Allows those married but filing separately to convert
- Allows taxpayers to defer their tax liability on amounts converted in 2010, paying amount equally over tax years 2011 and 2012
- This provision does not impact direct rollovers form Roth 401(k) and Roth 403 (b) to Roth IRAs which have always been allowed.
While you should not rush into a Roth IRA conversion, there may be several instances where a conversion will leave you in a better financial situation over the long term. When considering if you should convert to a Roth IRA, there are two main subjects to think about; the effect on your finances during the Roth conversion and the effect at retirement.
Market Commentary
By: Wabash Capital Investment Committee
A year ago the media was referring to improving economic numbers as “green shoots” in what was hopefully an end to a deep recession set off by the credit crisis. Economic reports showed the economy was starting to grow again. By the end of last year, positive growth in GDP did indeed suggest that things were on the mend.
Fast forward to summer 2010, and these
same economic numbers have become less positive, causing worry that a double-dip
recession is upon us. Housing starts, existing home sales, employment data,
retail sales, and the Conference Board’s Leading Economic Index (see chart)
illustrate an economy that is struggling to gain momentum.
May 2010
A Matter of
Trust
By: Don Edwards, CFA
I recently attended the CFA Institute’s Annual Conference in Boston. Once a year, investment professionals from all over the world gather to hear discussions from a host of world renowned speakers that range from Noble Laureates to thought provoking authors covering a wide range of industry issues. A common theme from this year’s conference involved the loss of trust by the investing public toward the financial industry in the aftermath of the recent global financial crisis. While we will hopefully cover a wide range of investment related topics in this newsletter in the years to come, I wanted to talk in this first issue about the matter of trust and how we as an industry can do a better job in the future than we have done in the past.
Retirement --- How
Much Is Enough?
By: Ginger Scott, ARPS
When it comes to your savings needs in retirement, there are some key questions you should be asking yourself.
Market Commentary
By: Wabash Capital Investment Committee
On Thursday, the Dow Jones Industrial Average entered “correction” territory for the first time since March 2009 market lows. A correction is a decline from market highs of at least 10% and the current retracement is from a market peak of 11,205 hit on April 26th. The Greek debt crisis and the lack of immediate response by European Union leadership started the decline nearly a month ago. This week, festering concerns about Greece, news that initial jobless claims increased and the decline of the leading economic indicator for the first time since March 2009 only caused renewed selling to recent lows.