photos courtesy of Gary Morrison

Stock Markets in Presidential Election Years

by Steve on February 9, 2016

I love to watch the theater that is our Presidential Election process. After the latest round of primaries, I started to wonder what effect this goofy process might have on the stock market. After all, this year has been off to a rocky start. Might this foretell a down year? Let’s look at some statistics.

Since 1900, the stock market has declined in 66% of the years that a President was newly elected. Of course, that means that 44% of the time the market was up too. In those down years, the average decline was 1.2%. The worst decline occurred in 2008 in the last year of the Bush administration when we experienced a 41% decline. We all remember that one. I don’t think the election process had much to do with the down movement, but who knows?

My conclusion is that a Presidential year doesn’t much matter when it comes to the stock market. It’s fun to watch the politics, but they don’t have much impact on investment markets.

Stories Affect Investment Markets

by Steve on February 2, 2016

Even though we talk about investment markets as being efficient, they are not perfectly efficient because people are involved and people like stories. Since the dawn of our species, mankind has made up stories to explain what we could not understand. Greek myths explain how evil came to exist in the world (Pandora’s box),  in Vietnam, a solar eclipse was a giant frog eating the sun, and in China the legend of the White Snake unites good and evil.

The stories that are flying around today about why the investment markets do this or that are further examples of stories made up as a way to explain what we cannot understand. Whether it is a story made up by a journalist and supported by “facts” to fill newspaper space, a story from an entertainer (Cramer) or a explanation created by an individual watching her/his  account values go up and down in random patterns, stories are abundant. Be careful to what story you give sanction. Acting on a story can be dangerous to your financial health. No one can predict the future and explaining the past is useless.

Happy New Year

January 26, 2016

I know I’m late with this good cheer, but it’s been a busy month so far, hasn’t it? What with end of year accounting, first of year goal setting and, oh yes, there is that 10%+ stock market plunge we all got to enjoy, I’ve been lax in writing this blog. However, if I had […]

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Personal Finance Wisdom from Star Wars Movies

December 21, 2015

With the latest Star Wars movie opening last week in the U.S., I could not help but notice the great personal finance wisdom the characters dispensed in the first six movies in the series. So we wrote a video press release to share the wisdom. You can view the release at Personal Finance Wisdom from […]

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Fiduciary Standard Debate

December 15, 2015

There is currently a hot debate going on that the Department of Labor (DOL) has fostered regarding whether or not the fiduciary standard should be required for advisers who provide advice to retirement plan participants. The President is behind the standard as is Hilary Clinton and many other politicians. Aligned against this higher standard of […]

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Deadly Investment Sins

December 1, 2015

While working on an article about investing, I started by making a list of the most common investment mistakes that investors make. The list is long (waaaaay too long) so I divided individual mistakes into categories. I’ve dubbed these the “7 Deadly Investment Sins.” Here they are: Greed Fear Ignorance Poor tactics Impatience Following bad […]

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Simple Formula For Investing Success

November 23, 2015

The simplest formula for investment success is to follow the three “P’s”: Perspective: markets go up and down and this too will pass (good or bad). Persistence: long journeys require putting one foot in front of the other and sticking with it. Patience: raising kids, planting gardens, learning a new skill and investing all require […]

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The Future

November 17, 2015

The title of this post was the title of an intriguing article that ran in a “New York Times Magazine” article over the weekend. The article opened with this line: “Lots of people pretend they’ve got tomorrow figured out: tech gurus, politicians, C.E.O.s and (yes) journalists. But if we’re really honest with ourselves, the view […]

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No Longer Enough to Ask

November 10, 2015

Recently, a prospective client told me about a conversation he had with a representative from one of the largest discount brokerage firms (Fidelity, Schwab, TD Ameritrade, etc.). The client told me: “I inquired how he was compensated and he readily shared that he was paid by ABC based on three elements: 1) client survey results, […]

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10 Harsh Retirement Realities

October 22, 2015

If you’re getting close to retirement, there are some harsh financial realities you need to know about and have a plan to address: Down investment markets, especially early in your retirement Rising health care costs Inflation will eat away at your buying power Confusing Social Security options Navigating the multi-part health insurance program for retirees […]

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