Active Management’s Surprising Survival

While this article does get a little into the technical side of investing this month, its theme is at the core of our philosophy at Waypoint so we think it’s a good reminder to investors and clients.  It involves the idea (myth, really) that investors can consistently create “alpha” or out-performance by making changes to their investments (or hiring someone to do so) based on their current opinion with where we are economically or politically or historically.  Recently, our Director of Research with the BAM Alliance Larry Swedroe wrote (again) about the truths and myths of “active” investment management and the attempt to outperform:

It’s truly an amazing paradox. According to the Thomson Reuters Lipper second-quarter 2018 snapshot of U.S. mutual funds and exchange-traded products, active funds of all kinds, including money market funds, manage about $16.4 trillion.

That’s more than 2 1/2 times the $6 trillion managed by passive funds and ETFs. That’s also despite the overwhelming evidence that active management is a loser’s game (one that’s possible to win, but with odds of doing so that are so poor, the winning strategy is not to play). > SEE MORE

The BAM Alliance

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The BAM Alliance

Many Eggs; Many Baskets: The Importance of Global Diversification

As we wrote about back in April (10 Ways To Not Sweat The Small Stuff With Investing), market volatility has once again picked up.  If you’re like most, this is a news story that will take your attention from time to time.  So with that said, we felt like it was a good time to underscore the perennial value of building – and maintaining – a globally diversified investment portfolio for achieving your greatest financial goals.

 

 

Global diversification is such a powerful antacid for when (not if!) we experience market turbulence, it’s why we’ve long recommended spreading your market risks:

  • According to your personal goals and risk tolerances
  • Between stock and bond markets
  • Among evidence-based sources of expected long-term returns
  • Around the world

 

In short, broad, global diversification never goes out of style. > SEE MORE

Waypoint Wealth Management

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Waypoint Wealth Management

Trade Troubles?

You may have heard or read the news of an escalating trade war between the United States and China, which has dominated headlines recently as both countries formally imposed substantial tariffs on one another. In response to the Trump administration’s 25 percent tariff on $34 billion worth of Chinese goods (largely industrial and technology products), the Chinese government levied tariffs of equal size on certain U.S. goods (largely agricultural products). The U.S. government is expected to launch a second round of tariffs on China, worth another $16 billion, in the next few weeks. Then on July 11, the White House announced it is preparing yet another wave of tariffs targeting China to go into effect sometime after August 30.

 

 

This most recent trade conflict follows tariffs of up to 25 percent that the Trump administration imposed in June on steel and aluminum imports from Canada, Mexico and the European Union, who then countered with levies on U.S. exports ranging from maple syrup to Harley-Davidson motorcycles.

 

How do these decisions affect you, and is there anything we should be doing about it when it comes to your investments? > SEE MORE

Waypoint Wealth Management

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Waypoint Wealth Management

Rate Fears And Your Fixed Income Strategy

What a difference a decade makes.  It’s hard to believe it’s been approximately ten years since the “Great Recession” began. By year-end 2008, the U.S. Federal Reserve (the Fed) had lowered the target federal funds rate to near-zero and went on an aggressive easing campaign, hoping to resuscitate the economy with a booster shot of lending, borrowing and spending dollars.

Some would say the economic recovery that followed was a result of these Fed initiatives. More likely, there were a number of contributing factors including technology and innovation. Either way, the Fed has begun to reverse course, restoring its policies and targets closer to historical “norms” through quantitative tightening and gradually rising rates.

 

 

Here’s the $64,000 question: as an investor, what can or should you do to prepare if rates do continue to rise? For that matter, what can or should you do if they don’t? As usual, our advice may not be as action-packed as you might crave, but there are a number of solid, evidence-based strategies that stand the test of time.  > SEE MORE

Waypoint Wealth Management

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Waypoint Wealth Management

Thinking Differently About Investing

I can remember having that “light bulb moment” early in my career.  It was the late 90’s, and I was eager to find out what the “secret sauce” was that gave investors an edge.  I can remember analyzing the past performance of many, many money managers and continually discovering a common theme.  Those managers with better long-term track records proudly admitted that they paid less attention to shorter time frames.  They didn’t care what the stock market was going to do in any one, three, or even five year period.  Those who ended up with better returns than most of the other managers cared more about holding onto the stocks of businesses for longer periods of time and didn’t allow short-term volatility to get under their skin.

 

 

This is how it began to dawn on me: maybe it wasn’t important to try and figure out what the market was going to do, in order to be a successful investor.   > SEE MORE

Pete Dixon, CFP®

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Pete Dixon, CFP®

Partner and Advisor