Second Quarter 2005|Jim Williams| One of the most persistent “sky is falling” stories threatening investor’s confidence in the capital markets is the notion that when baby boomers retire, they will liquidate their investments in the equities markets producing a downward spiral of declining prices and increasing redemptions leaving us boomers in a market meltdown with greatly diminished retirement resources.
First Quarter 2004|Jim Williams| Occasionally when money is available for addition to a portfolio, the question arises as to whether it is a good time to invest. Stocks have been going up for 4 full quarters. Is the run-up over? Are stocks overpriced? Where will the market go next year? Stocks have been going down for the last three years. Isn’t this the end of the world? Shouldn’t we be buying canned goods?
Fourth Quarter 2003|Jim Williams| Two years ago in this newsletter, I addressed the issue of fixed-income asset classes in the investment portfolio. At that time, as now, interest rates were quite low, and the prospects for rising interest rates seemed gathering if not imminent. Rising interest rates mean declining bond prices (the longer the duration of the bond, the greater the decline in price, more about this later). And with yields as low as they are now, it makes fixed income seem like a quite unattractive investment alternative. But let’s remember why we have fixed income in the portfolio.
Third Quarter 2003|Jim Williams| New York State Attorney General Elliot Spitzer is at it again. Good for him. You are probably aware of the latest scandal to hit the financial services industry related to after-hours trading of mutual funds (Janus, Strong, Bank of America/Nations, Bank One Group, Alliance). Why have none of the funds in your portfolio been named in any of these allegations? Is it because we had some special insight into the trading operations of the funds? No. Is it because we’re smarter than everyone else? No. Perhaps it has something to do with what we look at when we evaluate investment vehicles.
First Quarter 2003|Jim Williams| I learned a lesson last month. While I was engrossed in the news coverage of the war in Iraq, my spirits were alternatively lifted and then dashed. In the space of time between the first Tuesday, when the first strike took place, and Sunday night after several Americans had died or been captured, I went from being quite optimistic about the prospect that the war would be over in a few days, to down-in-the-depths apprehension that all of the predictions of a “quagmire” were about to come true. As I considered my own reactions to the news coverage, I started to wonder if there might be some lessons with regards to the similar onslaught of information which comes at us with respect to the financial markets.
Second Quarter 2002|Jim Williams| We are now under a constant barrage of bad news in the financial pages. The declines in stock values have been dramatic. The S&P 500 is trading at levels we last saw over 5 years ago. The internet bubble, the irrational exuberance bubble, the speculative bubble, are all being erased. This is what fills the headlines. Let me urge you to consider where the pain is really coming from.