technology continues to advance into a place that's dear to our financial
lives: money. What constitutes “money” has evolved over the centuries, from
hard commodities like gold and silver to paper money minted by governments.
Now, computerized units of value have emerged in the online crypto currency market. Crypto currency could develop into a free-market force
that disrupts traditional money printed by governments and intermediated by
Warren Buffett is a billionaire investor famous for his talent at picking stocks that outperform the market. As the head of Berkshire Hathaway, Buffett's performance record is exceptional. His company is now one of the most valuable in the world. So why would a man like Buffett recommend index funds, when he built his fortune picking individual stocks?
In investment finance, risk is measured by a statistic called beta. A beta coefficient of 1.0 signifies that a stock moves up and down in the same manner as the market a whole. Beta less than 1.0 means that a stock is less volatile than the market and, you guessed it, beta higher than 1.0 is more volatile than the market. The question is, which would you rather own, high beta or low?
Historically, there has been a strong correlation between energy stocks and emerging markets. As goes energy, so go emerging markets, you might say. Over the past few years, the price of oil has plummeted. But now energy stocks are starting to rebound, which bodes well for emerging markets.
Health care is suffering in the wake of scandals at Valeant Pharmaceuticals and elsewhere in the industry. In the first quarter, health care was the worst performing sector in the market, according to Alliance Bernstein. So far this year, the market is up about 1.5% while health care is down about 4%. This divergence is due in part to worries about price
controls for prescription drug manufacturers.
In the recent past, machines such as computers were fast and efficient but not very smart. All they could do was what people explicitly programmed them to do in structured language. Today, machines can learn independently, transforming the way that business gets done. This trend is affecting financial markets and the economy as a whole.
By Michael D. Bodman Gold is one of the best ways to diversify your
investment mix. Long before paper currencies were invented, gold has been
used as a store of value. The shiny golden metal was, in many respects,
the original currency.
BOULDER, Colo. (Portfolio Economics) - Recently, I was asked by ETF Reference to provide my opinions about investing. As a result, I was quoted in an article titled "101 ETF Investing Tips from the Experts." My tip is #46, concerning buy-and-hold investing. Hope you enjoy the article, which I think is well worth reading.
BOULDER, Colo. (Portfolio Economics) - Critics say: "you'll never beat the market if you invest in index funds." This is misleading if not wrong on two counts. First, the vast majority of those who actively pick stocks fail to keep pace with the indexes they attempt to beat after accounting for all expenses. On average, index funds are by definition the winning strategy after all relevant expenses. Second, while it's true that you can't beat the market by investing in an index fund such as the Vanguard 500 Index Fund (MUTF: VFINX) -- since it is the market -- you can outperform through a portfolio of index funds tracking separate asset classes. This portfolio strategy based on asset classes is used by major university endowments, which have consistently outperformed the market.
BOULDER, Colo. (Portfolio Economics) - In cooperation with Reuters, Portfolio Economics is now publishing curated content about the economy and financial markets. Select economic and financial news will be made available to Portfolio Economics readers for up to 90 days, after which these stories will no longer be displayed, according to the terms of the relationship with Reuters. Portfolio Economics Publisher Michael Bodman handpicks the articles from Reuters that get published on this site.