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When policies are anti-growth, sell the rallies and buy the dips

The equity markets are generally forward-looking. That’s why you have price movements that seem incompatible with the latest economic (backward-looking) data. The equity market today, as seen through the eyes of the S&P 500, has been flirting with all-time highs while the economic data indicate that the economy continues on feeble legs. So, just as the “forward-looking” market has predicted 25 of the last 8 recessions, so too, it can …Read More

What you’re really paying in 401(k) and IRA fees

Originally published on Marketwatch.com http://www.marketwatch.com/(X(1)A(NCs7wM73zAEkAAAAN2FjYzUwM2EtMjcyMC00NGZhLTg2NzktMDdkYTk2OWFiYmJhWd_GBHQPhVYaf0xxk3ruPENcrgw1))/story/what-youre-really-paying-in-401k-and-ira-fees-2014-09-29 You’re probably paying more than you realize. A recent study by the Federal Reserve, the Survey of Consumer Finances, found that Americans’ retirement savings in IRA and 401(k) plans are not quite as solid as they should be. If you’re going to be successful with your retirement savings, it is critical that you understand the fees and expenses you are incurring. AARP did a survey …Read More

Junk bonds turn up the risk for retirees

In a “normal” interest rate environment, a retiree fortunate enough to have $1 million could get about $45,000 a year in income by investing in 10-yearTreasury bonds without risking principal if held to maturity. Yields have recently risen from historic lows, but in today’s low-rate world, an investor with $1 million can only get an annual income of about $25,000 by investing in 10-year Treasurys. For the last five years, …Read More

Awash in Liquidity, Part 2: The Long-Term Consequences of Falling Interest Rates

First published at Minyanville.com http://www.minyanville.com/business-news/the-economy/articles/Awash-in-Liquidity-Part-2-The/5/28/2014/id/55108 There are going to be unintended effects that we can’t yet discern, but there are some issues that we already know about. In the first installment of this two-part series (Awash in Liquidity, Part I: Why Interest Rates Are Falling), I discussed how the world has come to be knee-deep in liquidity.  As a consequence, interest rates, as seen through US 10-year Treasury yields, have …Read More

ZIRP and bond risk

ZIRP is an acronym that stands for “zero interest rate policy.” For the last five years, the Fed has employed a zero interest rate policy to help stimulate the economy. Investors need to understand all of the risks that their hard earned investment dollars can be exposed to. Most investors buy stocks and stock mutual funds when they’re in the accumulation phase of their retirement planning. As they age they …Read More