Fools Indeed

You get what you pay for. Here’s some advice from the folks at “The Motley Fool,” who predicted the Dow would go to 5,000. The article is dated March 2, 2009, exactly one week before the recent market bottom. Pay particular attention to all of the “doomsday” reader comments at the bottom. The market always [...]

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Fund Fees Matter

“Past performance is no indication of future results.” That disclaimer is required by law on all brokerage firm statements. How about this one: “Fund fees are an indication of future performance.” To state what should be obvious, the higher the fees, the lower the expected performance.
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Investors on the Sidelines

Investing is an activity that can be characterized as simple but not easy. One of the most difficult parts of investing is hanging in there when things get tough. If you aren’t in the market during the good times, you will never make up for being in the market during the bad times.
Unfortunately, a “wait [...]

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To Roth or Not to Roth?

In 2010, the Feds are offering high income taxpayers an opportunity to convert a traditional IRA to a Roth IRA (regardless of income). They’ve even sweetened the pot with a deferral of the tax owed on the conversion (over two years, 2011-2012).
So, should you convert? It depends on a number of factors and the decision [...]

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Long Live Buy and Hold

There’s been much in the financial press lately declaring “buy and hold” and “diversification” dead.
The problem with that premise is that although diversification is no silver bullet, it works much better than all of its ineffective alternatives.
“Most NBA players aren’t very effective at guarding LeBron James, but that doesn’t mean you could dominate him if [...]

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Investing Lessons from Gamblers and Golfers

Several fascinating studies from the world of golf and blackjack confirm what behavioral psychologists have long known about investors:
The fear of loss tends to outweigh the desire for gain.
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The Pattern is… There is No Pattern

Human nature causes people to look for (and convince themselves that they have found) patterns in everything. The financial markets are no different.
One such popular “pattern” is the abysmal historical performance of the stock market during the month of September.
But before you ascribe statistical relevance to any investment “pattern,” ask yourself two questions:
1) Is there [...]

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Daytrading Reprise: This Time it’s Currencies

Do you remember when everyone seemed to be quitting their jobs so they could devote more time to their new-found day-trading skills?

Well, here we go again. History has a tendency to repeat itself and this time around it is likely to end even worse since currency trading usually employs massive leverage (ie, up to 100 [...]

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Guaranteed Annuity Benefits Not What They Seem

Many annuity salespeople are using the economic collapse as an opportunity to play on people’s fears by offering a “guaranteed” stock market return with no downside.
Sadly, if it sounds too good to be true, it probably is. The implicit rate of return on these products after the high sales charges, mortality costs, and “put option” [...]

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IRS May Cut 401(k) Contribution Limit

Because of the current deflationary environment, the Feds may cut the employee deferral limit to $16,000 in 2010.
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