As any engineer can tell you, sensitivity and stress testing are important tools in determining how a system can fail and therefore, determining the safe usage for that system. When it comes to your financial life, it should be no different. Stress testing your financial plan is an important exercise in determining the health of your wealth. While this a... Read More
Margin Debt Hits All-Time High, or Does It?
If it bleeds, it leads. ~Joe Loder in Nightcrawler Margin debt recently hit an all-time high—$528 billion as of February month end. But, by another measure, margin debt divided by underlying assets, it’s actually at a lower level than it was in February 2009—the start of the market recovery from the global financial crises. So, how concerned should you be... Read More
How Do You Know If Your Investment Strategy Has Stopped Working?
Over the last three calendar years, Global stocks (MSCI All Country World Index - ACWI) have returned a meager 3.7% annualized leading some to question their investment approach. Large market moves up are obviously fun, and even big moves down are often easier to ride out (at least you can see something happening) than a sideways markets. It’s extended periods of... Read More
Social Security Income: How to Delay and Optimize for Taxes
We received a couple of questions on our recent post “How to Increase Retirement Wealth With the Right Withdrawal Order” and will address the first one here. (Note: as we mentioned earlier this year, we will be making an effort to address more reader questions on the blog this year, so, if you have questions send them in.) The question... Read More
Contradicting Warren Buffett: When Volatility is Risk
Last week I enjoyed dinner with a group of people, one of which happened to be a hedge fund manager and fellow CFA charterholder. As us finance-types are wont to do, we quickly made our way to a discussion of every investment nerd’s favorite question: what is risk? Warren Buffett, in his 2014 Berkshire Hathaway annual letter (page 18), shared... Read More
How To Reduce Your Target Number and Retire Earlier
In a recent article, Michael Kitces points out the dual benefits in staying off of the hedonic treadmill as it relates to income increases throughout your career—higher savings today and a lower required replacement income (meaning a lower portfolio balance is needed) when you retire. These two factors make a powerful combination in moving anyone towards their retirement number much quicker... Read More
10 Things We Believe Wealth Management Should Be
1. We believe in being intentional What do you want to accomplish? Why do you want to accomplish it? Gaining this clarity by answering these “big questions” leads to better outcomes and a higher chance of success. When you get clear on your objectives, only then can the best strategy be put in place to accomplish them. Being intentional about... Read More
[W]indexing: When Average Isn’t Average
All truth passes through three stages. First, it is ridiculed. Second, it is violently opposed. Third, it is accepted as being self-evident. –Arthur Schopenhauer 19th-century German philosopher, Arthur Schopenhauer thought truth (and in this case, we'll extrapolate to include “new ideas”) passed through three stages: ridicule, opposition, then acceptance. While the index fund, which turned 40 last year, is a... Read More
Financial Rules of Thumb: Debunking Common Misconceptions about Retirement Planning
Recently, legendary investor Charlie Ellis was interviewed by Barry Ritholtz on his Bloomberg Masters in Business podcast. The whole interview is worth your time, but here I wanted to focus on just one of the topics they covered: The danger in using rules of thumb. Here is the exchange: Ritholtz: As an investor, how do you aim in the right... Read More
Checking in on the Portland Real Estate Market: Will Prices Continue to Rise?
Real estate is all about “location, location, location” as the saying goes and lately, Portland is the place to be. One of the strongest markets nationally, prices have risen 10.3% over the last year compared to 5.1% nationally, as measured by the Case-Shiller Home Price 20-city composite index. In fact, among the metro areas measured by the 20-city index over... Read More