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The Best of What They Said and I Read week ending 8/20/2017

Short excerpts from articles I found interesting.

I may not agree with the author and the following material is not intended as investment advice.


U.S. Global Investors – August 18, 2017 - Investor Alert - by Frank Holmes

  • “…The Gone Fishin’ portfolio is based on the idea that, since nobody knows with any certainty what the economy or market is going to do, it’s sensible to make the foundation of your portfolio a diversified, asset-allocated basket of index funds. You want to make sure your expenses are low and that you have high tax-efficiency and your asset classes are properly represented. Simple and straightforward.  The idea is that there are 10 different asset classes in the portfolio, and you invest according to various percentages: 30 percent in U.S. stocks, 30 percent in foreign stocks, 10 percent each in high-grade bonds, high-yield bonds and Treasuries, and 5 percent each in real estate investment trusts (REITs) and gold shares.  Then, at the end of every year—or on your birthday or anniversary—rebalance the portfolio to bring all the target percentages back into alignment. That reduces your risk because you’re cutting back on what’s depreciated the most and adding to what’s depreciated the least. Over time, this adds to your return while reducing the portfolio’s volatility.
  • “…The major market indices finished down this week.  The Dow Jones Industrial Average lost 0.84 percent. The S&P 500 Stock Index fell 0.65 percent, while the Nasdaq Composite fell 0.64 percent. The Russell 2000 small capitalization index lost 1.20 percent this week.”

Barron’s – August 18, 2017 – Warren Buffett’s Best Advice…and Why He Doesn’t Own Gold –– by John Heins

  • “…In Buffett: The Making of an American Capitalist, Roger Lowenstein wrote that “Buffett’s character and career unfolded as a sort of public tutorial on investing and on American business.” To cite just one example, at the height of the financial crisis in October 2008, Buffett wrote an essay for the New York Times under the headline, “Buy American. I Am.”
  • “Using a measured tone that was in short supply at the time, he calmly laid out his case for buying U.S. stocks for his personal account, which had previously held only U.S. government bonds. Repeating his long-held investing advice to “be fearful when others are greedy, and be greedy when others are fearful,” he succinctly offered up timeless wisdom and timely advice:  “I haven’t the faintest idea as to whether stocks will be higher or lower a month—or a year—from now. What is likely, however, is that the market will move higher, perhaps substantially so, well before either sentiment or the economy turns up. So if you wait for the robins, spring will be over.  “Equities will almost certainly outperform cash over the next decade, probably by a substantial degree. Those investors who cling now to cash are betting they can efficiently time their move away from it later. In waiting for the comfort of good news, they are ignoring Wayne Gretzky’s advice, ‘I skate to where the puck is going to be, not to where it has been.’ ”

AAII Journal– August, 17, 2017 – The New Bubble:  Bitcoin and Other Cryptocurrencies by Charles Rotblut

  •  “…Bitcoin rose above the $4,000 price mark, adding to this year’s surge in value…Regardless of the reason given, the price action exemplifies unfettered speculation.  To be fair, there are those who view bitcoin and other cryptocurrencies as alternative means of storing wealth. Cryptocurrencies are not issued by central governments nor controlled by central banks. They are tradeable globally as long as someone has an internet connection. In the case of bitcoin at least, there is a limit to how many can be ever created.
  •  Still, the introduction of “ICO” (initial coin offering) to Wall Street’s lexicon smells of tulips, Dutch tulips to be specific …Business Insider tabulates that more than $1 billion has been raised through ICOs so far this year. The digital coin offerings have even sparked the Securities and Exchange Commission to issue an Investor Bulletin about them.  Backers and speculators are gambling that one or more of these alternative currency platforms will achieve a lasting and sizeable scale... While many people may have heard of bitcoin, most probably have no idea how to get it or what to do with it…The number of people who are willing to transact in any of them is even smaller—much, much smaller. Go to your supermarket chain, your car repair shop or your plumber and ask them if you can pay with bitcoin. The answers will be no, no and no. Even e-commerce giant Amazon does not accept bitcoin.”

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