Your Investments Don’t Care Who Wins

Countless words and boundless time have been expended over the ages debating which political party is best for the investment markets. Good news! You can stop worrying and wasting your time because 160 years of history are very clear on this question.

markets-dont-careVanguard research going back to 1853 demonstrates that stock market returns are virtually identical regardless of which party is in the White House (see chart above).  Similarly, Vanguard finds the political party of the president has little impact on the bond market as well.

So take a deep breath and relax because your investments* don’t care who wins on November 8th.
(* “your investments” should be a diverse portfolio of assets that serves a long-term investment discipline that is goal focused and planning driven) 

Source: Vanguard

3-D View of the Yield Curve

Here’s an awesome graphic from the New York Times showing the yield curve in three dimensions (time, duration, yield).  The yield curve shows how much its costs the federal government to borrow money for a given amount of time, revealing the relationship between long- and short- term interest rates.

Visit the NYT website to continue the 3D exploration.

3d-yield-curve

75% of Americans get the Most Important Investing Question WRONG

Powerful observation from Vox.com regarding public perception versus reality when it comes to how to best invest your money:

Which of the following do you think is the best long-term investment?

  1. Real Estate

  2. Gold

  3. Stocks/Mutual Funds

  4. Savings Account

Don’t feel bad if you didn’t get the answer right. You’re in good company.

Recently, Gallup asked Americans what they thought their best investment bet was over the long run. 24 percent of Americans named stocks and mutual funds — but the same share named gold, and even more (30 percent) named real estate. The trend lines are actually positive, as in 2011 a baffling 34 percent of Americans named gold as their top pick:

gallupThere’s a right answer here — and it’s one that about two thirds of respondents who answered the question got wrong. If history is any guide, stocks are the best bet in the long run, and gold and real estate certainly are not.

siegel_returns

Source: Vox.com

Smart Money Newsletter ~ September 2011

Here’s the September issue of Smart Money. This is a complimentary newsletter published by  NorthStar Capital Advisors that covers  financial education, money management, and investment strategies.

Click the cover image to view or click here to download it directly. You can always get the latest issue of Smart Money by visiting www.nstarcapital.com/newsletters.

The lead article describes how financial fraudsters come in all guises and often scam people in their most intimate social circles. Please help protect yourself, your friends, and your family by learning to recognize these swindlers and sharing this article with others.

The Investing 101 column walks you through the asset allocation puzzle, the biggest decision you will make regarding your investments. The newsletter also covers college savings and advice from Warren Buffett.

We hope you find this information useful. Please feel free to share with family and friends if you find it valuable.

Thank you

Fix your money mistakes: Not enough risk
  • “Probably the biggest shift I am seeing is that clients are solely concerned about their downside.  And they are all too willing to give up potential upside just to be sure their downside is protected.”
  • Even with today’s sub-3% inflation, you can’t hope to keep up if your money is earning half a percentage point at the bank. When your portfolio lags inflation, your purchasing power is gradually chipped away.
  • Over the past 50 years inflation has averaged 4.1%; during that time, large-cap stocks returned an annualized 9.8%.
  • “As hard as it may be to stick with stocks, given what has happened history has proved that they have a great record of delivering inflation-beating gains.”

Learn more about common money mistakes and how you can fix them in this article:  

Fix your money mistakes: Not enough risk - May. 19, 2011
Fix your money mistakes: Not enough risk – May. 19, 2011http://money.cnn.com/2011/05/19/retirement/mistakes-too-cautious.moneymag/index.htm(Money Magazine) — With every financial decision, you have to balance two competing urges: the desire to not be poor and the desire to be rich. Lately the former has been trouncing the latter.
Bond Risks

A reminder that the bond market, thought by many as a safe haven during volatile markets, carries plenty of its own risks.

Be Aware of the Current Risk in Bonds - Seeking Alpha 

Be Aware of the Current Risk in Bondshttp://seekingalpha.com/Money continues to pour into bonds at a ferocious pace, with investors confident they are a safe and conservative holding in the midst of all the economic and stock market uncertainty.
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