We’re seeing a backlash against globalization—and Brexit is just the latest example. Across the developed world, the free movement of trade and people is being called into question. The big concern for investors: If trade and migration are curtailed, will economic growth suffer, hurting corporate profits?
After yesterday’s market decline, the S&P 500 is sitting 4% below its May 2015 all-time high. This lackluster performance has no doubt disappointed many investors. But arguably, we should be grateful we haven’t been hit with a brutal market decline.
I have never been to Japan and can’t claim any special knowledge of the country—and yet lately it’s been much on my mind. Japan is today’s poster child not only for wretched long-run stock market performance, but also for what happens to economic growth when the workforce contracts. Still, Japan’s troubles make me an even bigger advocate of investing abroad. Below, I explain why.
Never Going Back
In late 2008 and early 2009,
Ten-year Treasury notes are currently yielding 1.9%. That means today’s buyers will likely lose money, once inflation and taxes are figured in—and yet demand remains robust, as evidenced by 2016’s rise in Treasury bond prices. The healthy appetite for Treasurys partly reflects the vast amount of excess capital sloshing around the global financial markets, as well as the tiny payouts on alternatives such as money-market funds and savings accounts. But it also reflects the current fear engendered by both stocks and lower-quality bonds.
Welcome to this special edition of my newsletter. I hadn’t planned to put out another of these free newsletters until March. But with the S&P 500-stock index down 13% from its May 2015 high, it seems like an apt time to address market valuations and discuss what folks ought to do with their portfolio.
Stocks started 2016 with a thud—and there’s been almost nowhere to hide.
It’s January 1—a day of great hope. Those New Year’s resolutions to save more still seem achievable. Nobody’s investment results have yet fallen behind the market averages. Market pundits can still fantasize that this year they’ll be proven right. In this spirit of optimism, check out my 16 ways to improve your life in 2016. Below, you’ll also find some thoughts on bond-market risk.
16 Ways to Improve Your Life in 2016
I don’t trade very often, let alone buy new funds. But there’s a good chance I’ll purchase the no-load Vanguard International High Dividend Yield Index Fund, which is slated to be launched this month. It will charge 0.3% in annual expenses for the Admiral Shares, which require a $10,000 minimum investment, and 0.4% for the Investor Shares, which will have a $3,000 minimum.
In theory, it shouldn’t matter whether a stock pays a dividend.
As I watch the recent market turmoil, three thoughts come to mind—and one great hope. First, I feel like a shopper waiting for the next sale. As of yesterday’s market close, the S&P 500 was down a relatively modest 8% from its May high. If this drags on, without any further decline, I’ll eventually do a little buying and selling, to bring my holdings back into line with my target portfolio percentages. But to get enthusiastic about stocks,