Tag Archives: Investing

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to describe the Dow Jones Industrial Average in one word, chances are the answers would include words like “narrow”, “outdated”, or even “irrelevant”.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

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

7 Low-Risk Investments With High Returns in 2019 | TheStreet

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Low-risk is a relative term when it comes to investing. The classic risk-free investment is Treasury securities, but even they carry some degree of price risk. For those looking for low-risk investments, here are some to consider….

— Read on www.thestreet.com/personal-finance/low-risk-investments-with-high-returns-15170504

John Bogle – The 7 Rules For Successful Stock Market Investing

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Stay the course.

Regardless of what happens in the markets, stick to your investment program. Changing your strategy at the wrong time can be the single most devastating mistake you can make as an investor. (Just ask investors who moved a significant portion of their portfolio to cash during the depths of the financial crisis, only to miss out on part or even all of the subsequent eight-year—and counting—bull market that we have enjoyed ever since.)

“Stay the course” is the most important piece of advice Jack Bogle can give you.

John Bogle, founder of the Vanguard Group, provides his seven investing rules for successful stock market investing.

— Read on www.valuewalk.com/2017/06/john-bogle-7-rules-successful-stock-market-investing/amp/

Over half of Americans aren’t taking this simple step to grow wealth | CNBC

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Over half of Americans, 55%, say they are not participating in the stock market, according to a new poll from MetLife of over 8,000 U.S. adults over the age of 18. The survey finds that age is definitely a factor. Gen Z (ages 18 to 24) and millennials (defined here as ages 25 to 34) are opting out in far greater numbers than older Americans.

But gender also plays a role — 44% of men report they aren’t investing, compared to 59% of women. And men tend to be more likely to invest in some type of mutual or index funds and stocks.

Yet when it comes to building long-term wealth, saving alone typically isn’t enough.
— Read on www.cnbc.com/2019/10/09/over-half-of-americans-arent-taking-this-simple-step-to-grow-wealth.html

Knightscope

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Knightscope’s mission is to make the United States of America the safest country in the world. 

https://www.knightscope.com/invest

The Knightscope Machine-as-a-Service (MaaS) strategy targets an effective, profitable business model with high recurring revenues at scale with hardware, software, and support components. Our contracts can generate up to $96K per annum providing clients an effective hourly rate of approximately $6 – $12 per hour depending on type of machine and options selected. We target recovering $60K in bill-of-material cost of the robot in year one and we also target $250K estimated profit per robot over targeted life of 5 Years.* Approximately 30% of customers pre-pay full year contract in advance.

Five retirement income planning tips. | New York Life

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Save, invest, start early and delay retirement as long as possible are the conventional points of wisdom about retirement planning. But an investor should also consider what their income needs will be in retirement.

Here are some tips to move your thinking from saving for to living in retirement:

THINK INCOME, NOT JUST DOLLARS SAVED.
Instead of focusing on a target number (i.e., “I want to save $500,000 by age 60”), think about income. 

  • What are your monthly expenses and are you able to cover them?
  • Do you plan to downsize? Or would you like to treat yourself to some luxuries in retirement? Do you want travel?
  • Do you want to leave a legacy to your family?
  • How will your savings fare against inflation?
  • There are many great online tools to help you nail down those details—take a look at some of our planning tools.
      • REVISIT YOUR INITIAL WITHDRAWAL RATE.
      You may start off your retirement with certain needs, but those needs inevitably will change. Make sure you evaluate your withdrawal rate with your financial professional at least annually to make sure you are not drawing too much or too little, and are taking life changes into account.
      TO TAKE OR NOT TO TAKE SOCIAL SECURITY.
      Deciding when to take Social Security varies by individual. Conventional wisdom suggests taking Social Security as late as possible, but that may not be the best decision for you, depending on your health, marital, and financial status. A financial professional can help you determine your ideal time.
      TRANSITION YOUR PORTFOLIO FOR RETIREMENT.
      Build in time to make necessary changes to your portfolio before you retire. That way you are ready and are not making any unnecessary shifts during retirement. In general, a retirement portfolio is less about growth and more about income.
      PLAN FOR A LONG LIFE.
      Life expectancy is on the rise, thanks to advances in health care. This means your money will have to last longer. Consider long-term income vehicles, such as fixed immediate annuities, that provide a steady stream of income for life.
      Making sure you have enough income to live comfortably can help ensure that you don’t tarnish your golden years. By using these tips, you can plan today for a better tomorrow.
      — Read on www.newyorklife.com/articles/5-retirement-income-planning-tips

    10 BDCs to Buy for Big-Time Income

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    Business development companies (BDCs) were literally designed with dividends in mind. These 10 BDCs to buy yield up to 10.9%.

    Business development companies provide firms with debt and equity capital, or a combination of the two, to help them grow. Many of the largest BDCs available to investors today provide equity and debt financing to middle-market companies, a considerable number of which operate industrial businesses with stable cash flows.

    They first came to be in 1980 when Congress passed an amendment to the Investment Act of 1940 that created a new category of closed-end investment company: BDCs.

    For tax purposes, BDCs must pay out 90% or more of their taxable income in the form of dividends so they can retain the tax benefits of regulated investment companies. BDCs may raise their dividends in boom times, however it’s not uncommon for some to cut their payouts depending on the business environment.

    BDCs have become popular with retail investors over the past decade because of the significant income they generate. These companies often yield more than 8% on their distributions.

    One thing to pay attention to when evaluating BDCs is costs. Externally managed BDC pay advisory fee and typically pay a low double digit percentage of returns or profits to the fund advisory manager. Internally managed BDC do not pay advisory fees. It does, however, incur the operating expenses of employing investment professionals to do investment analysis, research and other duties.

    — Read on www.kiplinger.com/slideshow/investing/T018-S001-10-bdcs-to-buy-for-big-time-income/index.html