Tag Archives: Investing

3 moves for catching up on retirement savings | MassMutual

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In order to have a decent shot at maintaining your standard of living in retirement, you should have six to nine times your salary tucked away in a 401(k) or other savings accounts by your mid-50s to early 60s.

“That’s as good a general rule of thumb as any, but most people don’t come close to that, and some don’t have anything saved,” said retirement expert Mary Beth Franklin, a Certified Financial Planner® and contributing editor at InvestmentNews, in an interview.

Indeed, in a 2014 national poll conducted by Bankrate, more than a quarter of survey respondents aged 50 to 64 said they had not started saving for retirement.1

Granted, it’s never too late to start saving for retirement, but let’s not sugarcoat this. “At this stage of the game, you would need to save 40 percent of your income to reach the equivalent of what you would have had, had you started saving just 10 percent of your income in your 20s,” said Liz Weston, a columnist with NerdWallet, a personal finance site.
— Read on blog.massmutual.com/post/retirement-savings-catch-up

3 reasons investors might not be benefiting from rock-bottom fund fees – MarketWatch

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There’s more to successful investing than just watching costs

The index fund fee-cutting battle reached its seemingly inevitable conclusion more than a year ago, when Fidelity Investments launched four zero-cost index funds. You can’t get any lower than zero, right? Apparently, you can. One small fund company is now effectively paying investors to own one of its index funds.

Still, the price war among financial companies has clearly moved on, with some firms eliminating brokerage commissions in 2019 or touting the high interest rate paid by their brokerage cash account. Cutting index-fund expenses is, it seems, so last year.
— Read on www.marketwatch.com/story/3-reasons-investors-arent-benefiting-from-rock-bottom-fund-fees-2019-12-18

Paying Yourself First

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“Don’t save what is left after spending; spend what is left after saving.”

Warren Buffett

Automated saving and paying yourself first are probably the top two things Americans can do to create wealth and financial security.

Too many people try to save in a way that’s exactly backward. They spend first and then attempt to save up toward the end of the year.

The far more powerful way to save and invest is to set aside a percentage of your income every pay period — recommended 15%, 20% or more — and to save and invest it automatically.

Inevitably rich

Most of the folks who have accumulated wealth got there by systematically socking away a reasonable percentage of their pay into a broad array of stocks and keep doing it for decades.

The key take-aways are to make your savings an automatic deposit so you don’t get a chance to change your mind and spend it. And, spend what’s left and you’re certain to be on the right path to build wealth for tomorrow. Additionally, don’t forget to invest it!

By saving first, you eliminate the problem of not having enough money to save at the end of the month. Setting up automatic deposit into savings or brokerage accounts, you can secure your financial future and build wealth.

Source: https://www.marketwatch.com/story/the-huge-financial-force-even-albert-einstein-missed-2019-12-10

What this man regrets about going from $2.26 to $1 million in five years

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BY MARKETWATCH — 12/12/2019 3:37 PM ET

Achieving financial independence took time and sacrifice — and came with some regrets
In five years, Grant Sabatier went from having just a few bucks in his bank account to more than $1 million — and he did it through side hustles, sacrifice and investing. But if he had to do it all over again, he said he probably wouldn’t have done it quite the same way.
He made many trade-offs, and a few mistakes, like “making money my God and chasing the next thing, no matter what,” he admitted.
The young millionaire, who blogs at MillennialMoney.com (https://millennialmoney.com/) and is the author of “Financial Freedom,” accomplished financial independence by making small goals for himself — first, shooting to save $1,000, then $2,000, then $4,000. As he reached his goals, he’d double them. “We usually focus on the million-dollar goal or retiring early, and while it is important to set goals, don’t let those goals distract you from taking the next step,” he said. Starting small and consistently doubling his figures made the goal accessible, mentally and physically. “If you are completely in debt and you don’t have anything saved, just save your first $1,000, and see how it makes you feel,” he said. “You’ll feel better than you thought you would.”
But there needs to be balance, something he did not account for on his path to $1 million. That means enjoying life, and that looks differently for everyone (http://www.marketwatch.com/story/its-time-to-stop-judging-people-for-drinking- lattes-and-getting-regular-haircuts-2019-05-14). Stripping yourself of experiences and items that are meaningful can backfire. Sabatier said he had to detox after five years of working 100-hour weeks and traveling, for example.
Hitting a financial goal should be less about quantitative reasons, like having $1 million in an investment portfolio, and more about qualitative reasons, like leaving a job you hate or paying for an annual family trip. “It’s about looking at your life. Do you feel like you’re growing? Do you feel like you’re in a place you like and you have friends you like? Do you like your life?” Sabatier said. “If the answer to that question is no, then the first place you need to look is your money.”

— Read on www.marketwatch.com/story/what-this-man-regrets-about-going-from-226-to-1-million-in-five-years-2019-12-12

IPO Stocks Luckin Coffee, Dynatrace, Progyny, Datadog, Ping Identity Near Buy Points | Investor’s Business Daily

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IPO stocks are hot right now, with several 2019 new issues acting bullishly, trading near buy points. Chinese Starbucks (SBUX) rival Luckin Coffee (LK) is one of five IPO stocks worth adding to your watch list this week. Dynatrace stock, Progyny stock, Datadog stock and Ping Identity stock round out the quintet.

Fertility services specialist Progyny (PGNY), cybersecurity play Ping Identity (PING) and app monitoring software maker Dynatrace (DT) are all profitable, while cloud software name Datadog (DDOG) is barking at the door of profitability. Luckin Coffee stock is a big money loser, but has tremendous sales growth.

— Read on www.investors.com/news/ipo-stocks-luckin-coffee-dynatrace-progyny-datadog-ping-near-buy-points/

Becoming a Better Investor

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  1. The secret to great investing is patience. Take the time to study, to learn and to practice. There is no rush. Make a Wish List of liked companies and wait for them to go on sale.
  2. Best investors often do best during market panics, when investors dump shares in fear, or when there’s unusual volatility, such when stocks soar to unrealistic levels.
  3. Take advantage of the greed and fear of other investors. Investors can profit by avoiding panics, picking up stocks for cheap in sudden selloffs and keeping emotions in check, even during volatile markets.
  4. Human emotion inevitably causes the prices of assets — even worthwhile assets — to be transported to levels that are extreme and unsustainable: either vertiginous highs or overly pessimistic lows.
  5. Focus on a company’s actual earnings, revenues and cash flow, and do not succumb to rosy projections and predictions about the distant future. Ignore the sometimes-enticing stories spun by bankers, analysts and others, the kinds that have led to huge losses for even sophisticated investors in recent years on high-profile companies.
  6. Security prices should generally fluctuate not much more than earnings and revenues. The reasons they fluctuate more are largely psychological, emotional and non-fundamental. The truth is that financial facts and figures are only a starting point for market behavior; investor rationality is the exception, not the rule; and the market spends little of its time calmly weighing financial data and setting prices free of emotion.
  7. Pick your spots, and only invest in areas you have a competitive advantage, perhaps due to a unique industry expertise. For all their skill, the firm only profits on barely more than 50% of its trades, a sign of how challenging it is to try to beat the market.
  8. “It’s different this time” are four of the most dangerous words in the business world — especially when applied, as is often the case, to something that has reached what in prior times would have been called an extreme. People’s decisions have great influence on economic, business and market cycles. And people don’t make their decisions based on science, facts or fundamentals.
  9. There are more factors and variables influencing financial markets and individual investments than most realize or can deduce. Investors tend to focus on the most basic forces, such as earnings, interest rates or short-ratios, but there are dozens of factors, perhaps whole dimensions of them, that are missed.
  10. Cycle positioning is the process of deciding on the risk posture of your portfolio in response to your judgments regarding the principal cycles. It primarily consists of choosing between aggressiveness and defensiveness: increasing and decreasing exposure to market movements. The recipe for success consists of (a) thoughtful analysis of where the market stands in its cycle, (b) a resulting increase in aggressiveness or defensiveness, and (c) being proved right. These things can be summed up as “skill” or “alpha” at cycle positioning.
  11. Detecting and exploiting the extremes of market cycles is really the best anyone can hope for. Between the extremes of “rich” and “cheap” — when the cycle is in the middle ground of “fair” — the state of the relationship between price and value is, by definition, nowhere as clear-cut as at the extremes. If you frequently try to discern where we are in the cycle in the sense of “what’s going to happen tomorrow?” or “what’s in store for us next month?” you’re unlikely to find success. I describe such an effort as “trying to be cute.
  12. A backcast is an exercise where you imagine having reached a goal and then you work backward to figure out what happened to get you there. Backcasting is a more instinctive exercise. After all, we generally plan for success. 
  13. A premortem imagines the opposite — failing to reach your goal — and asks “how did that happen?” Imaging failure, on the other hand, doesn’t feel good. But failing to do a premortem can ruin even well-thought-out strategies for long-term success. If we anticipate later actions that can undermine our plans, we can improve the likelihood of staying on course.

Source: https://www.marketwatch.com/story/turn-yourself-into-a-better-investor-by-learning-from-hedge-fund-star-jim-simonss-successes-and-failures-2019-11-07?mod=home-page

Source: https://www.marketwatch.com/story/oaktrees-howard-marks-has-5-tips-to-make-you-a-superior-investor-2018-10-02

Source: https://www.marketwatch.com/story/this-champion-poker-player-says-a-premortem-can-make-you-a-better-investor-2018-03-07

Why 30 Stocks Are Better Than 100 Or 500: How The Dow Beat The Nasdaq 1999-2019 – SPDR Dow Jones Industrial Average ETF (NYSEARCA:DIA) | Seeking Alpha

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Since its ETF’s launch in early 1999, the Nasdaq-100 actually underperformed the Dow Jones Industrial Average on a total return basis for most of 20 years, until last week.

Both the Dow and Nasdaq have outperformed the S&P 500 on a total return basis, leaving the Dow as the clear winner on a risk-adjusted basis.

Fundamentals point to the Nasdaq’s recent catch-up as a repeat of the late 1990s run-up, meaning the Dow is likely to outperform again over the next 20 years.

The Dow’s greatest advantage is its simplicity, and this should make it a leader in the trend towards direct indexing.

If I were to ask 80 investors under the age of 80 to describe the Dow Jones Industrial Average in one word, chances are the answers would include words like “narrow”, “outdated”, or even “irrelevant”.

I’m also sure a vast majority of that same sample of “young” investors would never have guessed that this old Dow index has actually outperformed the much more modern and sexy Nasdaq-100 Index on a total return basis over most of the past 20 years. In this article, I explain: the surprising past outperformance of the Dow over the Nasdaq, and advantages I believe will make the Dow a better starting point than Nasdaq or S&P for outperformance over the next 20 years.
— Read on seekingalpha.com/article/4310588-why-30-stocks-are-better-100-500-how-dow-beat-nasdaq-1999minus-2019

U.S. – China Deal is Imminent

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China’s annual Economic Work Conference is likely to convene within the next two weeks, meaning a trade deal with the U.S. is “imminent,” according to ICBC Standard Bank Chief China Economist Jinny Yan.

www.cnbc.com/2019/11/27/icbc-us-china-deal-is-imminent-due-to-beijings-upcoming-policy-meeting.html

Animal Spirits

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Animal spirits refers the state of confidence or pessimism held by consumers, businesses and investors. Regarding financial markets, they represent the emotions of confidence, hope, fear, and pessimism that can affect an investor’s financial decision making, which in turn can fuel or hamper economic growth.

If spirits are low, then confidence levels will be low, which will drive down a promising market—even if the market or economy fundamentals are strong.

Likewise, if spirits are high, confidence among participants in the economy will be high, and market prices will soar.

According to the theory behind animal spirits, the decisions of investors and business leaders are based on intuition and the behavior of their competitors or other investors rather than on fundamental analysis.

Famous British economist, John Maynard Keynes believed that in times of economic upheaval, irrational thoughts might influence people as they pursue their financial self-interests. In 1936, Keyne published, The General Theory of Employment, Interest, and Money, where he postulated that trying to estimate the future yield of various stocks, companies, or financial activities using general knowledge and available insight “amounts to little and sometimes to nothing.”

Keynes referred to these psychological factors that make investors jump into the equity market — in the face of deep uncertainty and volatility, as animal spirits. He thought, only a manic, driven, strong-willed person would put capital at risk in periods of high uncertainty and volatility.

When animal spirits are strong, investment is sufficient to maintain aggregate demand; when they lag, aggregate demand falls, and the economy lapses into depression.

It is assumed that the only way people can make investment decisions in an uncertain and extremely volatile environment is if animal spirits guide them.

Source: CARLA TARDI, Animal Spirits, Investopedia, Updated Apr 20, 2019

What Are Cyclical v. Defensive Stocks? – TheStreet

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Cyclical companies are those that see higher revenue growth when the economy is growing and lower revenue growth – sometimes contractions — when the economy is in recession.
 
Defensive companies keep humming along whether or not the economy is growing.

— Read on www.thestreet.com/video/-what-are-cyclical-v-defensive-stocks–15178611