After reaching new highs in 2021, with the S&P 500 (SPY) returning almost 29% and the NASDAQ 100 (QQQ) returning about 27.5%, the market turned in 2022. The S&P 500 and NASDAQ 100 are down 13.2% and 25.8%, respectively, so far in 2022. Much of what has happened in 2022 is a reminder of the … Continue reading Investing Lessons From 2022
For years, I wanted to write a book on personal finance and financial literacy. I finally found the time and wrote my take on what people need to understand in order to be effective with money. I have gone back and forth about whether to publish the manuscript through traditional means, self publish, etc. I … Continue reading Free guide to personal finance
Historically, stock valuations have been an important predictive factor of future returns. A standard practice is to measure value by comparing stock prices to fundamental measures such as trailing earnings, projected earnings, dividends, and book value. I am increasingly questioning the usefulness of these measures however. While an enormous body of research has shown that … Continue reading Do stock valuations matter anymore?
The issue of retirement savings in the United States needs more sensible discussion and fewer sensationalist headlines such as The Retirement Crisis is Much Worse Than You Think and Fears of a Retirement Crisis are Overblown - and These Numbers Prove It. Unfortunately, discussions of this topic are rife with simplistic and misleading statistical arguments. … Continue reading Misleading statistics on the retirement crisis
Research Affiliates, a large money manager and research firm, has recently reaffirmed it's faith in value investing, the discipline of investing more heavily in stocks which appear cheap relative to their earnings or book value. Back in April of 2019, I wrote a blog post that explored the under-performance of value over the last fifteen … Continue reading Is it finally time to bet on value again?
The ways that people earn money, spend, borrow, and invest are all changing quickly. We are experiencing the greatest changes in personal finance since the start of the industrial revolution. To thrive in the new economy, people need to know far more and be disciplined and proactive in managing their finances. In this post, I … Continue reading The evolution of personal finance
The increase in stock buybacks is an important trend. This post explores the basics of buybacks and some of the controversy they inspire. Companies must choose how best to use their earnings. They can pursue new growth opportunities, they can pay dividends or they can purchase their own stock, a stock buyback (also referred to … Continue reading Understanding stock buybacks
In 2015, I decided to get my 14-year-old into investing. The school year is busy, so we started in June. Over years prior, I had taught him the basics of investing. We went over the the definitions of stocks and bonds, and then moved on to funds. I explained the basics of valuation measures such … Continue reading How my son started investing
The foundation of fundamental analysis is determining whether companies, sectors, and markets are expensive or cheap relative to measures of their inherent value. The most commonly-cited measure of value for stocks is the price-to-earnings (P/E) ratio. We might look at the most-recent year's earnings, the standard for P/E, or average earnings over a longer period … Continue reading Are stocks too expensive to be attractive?