Market Peak

The stock market recently surpassed two very meaningful price points.  The Dow Jones surpassed 14,000 and the S&P 500 reached 1,500 for the first time since 2007.  Many people are now starting to wonder whether we are “due for a correction” or are we at a market peak.  As I write this article the market indeed has pulled back from these highs.  But what, if any, influence should these index levels have to do with investing long term?

I think there are at least a few important questions to consider when this type of thinking creeps into our heads.

Predictably Unpredictable

By Eric Burkholder, Portfolio Manager

A 2012 review of market outcomes and the “experts” who failed to predict them.

“Prediction is very difficult, especially if it's about the future.” - Niels Bohr, Danish physicist

The world of investment advice and market forecasting is very profitable.  Let me rephrase that.  The world of investment advice and market forecasting is very profitable for those selling the advice.  The outcome for those who invest on said advice is not quite as rosy.  So each year I make a point to track all the “expert” predictions and highlight some of the more pronounced failures.  2012, as expected, did not disappoint.

Market Returns: A Presidential Prediction

With only a short time left until we select the 45th President of the United States of America many investors are in a state of panic.  Many believe the market is waiting for the outcome and if the "correct" candidate is selected the stock market will immediately surge on the news.  Or, if the "wrong" candidate is selected the market will tank the next day. Fortunately, history provides a guide on this matter and it suggests that, when it comes to U.S. Presidents, the market is a true Independent.

2013 IRS Inflation Adjustments

The IRS just announced inflation adjustments for 2013.  These rules affect many things such as your retirement plan contributions, gift tax exclusion, and the "kiddie" tax.  Make sure to bookmark this link as a handy reference.

 http://blogs.wsj.com/totalreturn/2012/10/18/irs-announces-2013-inflation-adjustments/

What Investment Returns Can $200 Billion Buy?

The last siren call of investment managers is an appeal to your ego.  This is how it goes:

“Yes, we know most managers fail miserably to outperform the market after they pay themselves hefty fees, but those guys are for the small accounts. You have a million dollars! This will get you access to the next level of managers.  The really good ones.”

Or: “Oh, of course, accounts below a million dollars are better off investing in asset classes, but you have 5 million dollars! We have proprietary research just for you.  Our investments trounce the market.”

Or: “Well sure, if you only had $5 million it might make sense to keep expenses low. But you have 10 million dollars! You can pay for our quantitative algorithm that picks the best stocks based on how loud Jim Cramer yells the ticker symbol.”

Joking aside.  The trend is clear and you can see the allure.  At every wealth level it seems you have just enough to get you access to the real managers.  So how do you know how much you really need to get the best managers?  Maybe there is a way to find out.  Maybe there is an investor out there so large that they trump every other investor and truly have access to the very best managers.  And maybe this investor makes their returns public so you can see exactly how well their access to the “best” managers turned out for them.