The biggest long-term problem facing investors right now isn't U.S. debt, or even European debt. It’s the likely near-indefinite future of very low returns on the lowest risk investments: CDs, money market funds, Treasury bills and notes, savings bonds, and even shorter-term corporate and municipal bonds. Any assets with a maximum downside of 5% or less probably have a likely upside of less than 2% per year for the foreseeable future.  ...read the rest of this article»

The year 2011 delivered plenty of volatility and little reward for stock investors. Equity returns were largely inversely related to risk – the smaller in size or more foreign the stock, the worse it performed. It was the same story all year; Europe teetered on the edge of a debt collapse while the U.S. economy teetered on the edge of recession. ...read the rest of this article»

Gold is set to deliver an astonishing 11th straight calendar year gain in 2011, a dramatic reversal of an equally astonishing 20-year slide that began in 1980 when the gold bubble collapsed. For 13 of the calendar years between 1981 and 2000, gold was a loser, in contrast to the S&P 500, which rose during 17 of those same 20 years. This stark comparison doesn’t do justice to the real money implications of sharply diverting ways. A thousand dollars invested into the Vanguard 500 Index Fund at the end of 1980 (even without 1980's 30%+ gain) grew to $17,524 by the end of 2000. The same investment in gold crumbled to $465. ...read the rest of this article»

As of November 14th, the S&P 500 is down a fraction, but up about 1% if you include dividends. In other words, despite the U.S. debt ceiling battles, euro debt chaos, and slow economic growth blues, investors are still beating money market funds and CDs. Granted, CDs don’t fall nearly 20% in a few weeks, look like they're going to slide another 50%, and then  recover. Such is the new market: low returns, sky-high volatility. ...read the rest of this article»

After this long plateau, inflation fears abound, oil prices remain uncomfortably high after skyrocketing a few years before. A global superpower is stuck in a war in Afghanistan, and Iraq is a war zone putting global oil supplies at risk. We have no idea where economic growth will come from, or when it will kick in. The government is a mess. Tax and regulatory uncertainty has business leaders scratching their heads. The unemployment rate, no longer stable at around 5%, seems to be heading toward 10%, and investing in precious metals or the far east appears to be the only way to make any money. ...read the rest of this article»

We’ve made trades our two model portfolios on September 20th to reflect 1) the market slide this year, and 2) increasing distaste for stock funds by investors, who are usually wrong. ...read the rest of this article»

If you believe  the brilliant minds at Standard & Poor’s, the U.S. must be mere months from collapse. After all, this is the same agency that continued to confer "Triple A" status on Enron debt until just a few months before its downfall. Standard & Poor's also waited too long to downgrade highly-rated debt created by Wall Street that contained sliced and diced home equity loan super tranches on bubble-inflated Vegas and Miami properties. We continue to believe U.S. government debt is safer from actual default risk than any debt in the world –though our debt probably is ever-so-slightly more at risk of a temporary default as politicians seem to think choosing default is a legitimate strategy. ...read the rest of this article»

There is no risk of a debt default currently priced into the market. Ten-year government bonds yield just under 3% today. No one wants to lend their money at 3% to a questionable borrower. That doesn’t mean a panic can’t start, perhaps from a debt downgrade or a run away from government debt, baseless or not. What people would do with the trillions of dollars they have in government debt is anybody’s guess. It can’t all go into the thin gold market. CDs are backed by the government. ...read the rest of this article»

The market’s recent weakness is causing a lot of anxiety. Since the last S&P 500 peak on April 29th, the actual decline has been a relatively mild 7.2% (as of June 15th). Yet the consistency of the slide is generating a lot of "worst decline since X" and "market down six weeks in a row" stories, stories that make investors nervous. Now we’re seeing people pull money from stock mutual funds a few months after big inflows. ...read the rest of this article»

Generally, stock funds launch following long runs up in stocks, when the appetite for stock investing is high. In particular, these launches tend to occur in the hottest of the already hot market. That's why so many Japanese, Asian, and emerging market funds launched in the early 1990s (to kick off the U.S. and other fully emerged stock  market decade with emerging markets lagging), small cap funds a few years after that (right before larger cap led the market), larger cap growth and tech funds in the late 1990s (before the 2000 crash), "dividend" and yield-focused funds around the mid 2000s (before high dividend banks collapsed), emerging market funds yet again in recent years, and commodity funds. ...read the rest of this article»