Top 5 of the Week of November 12th
Barry Ritholtz, writing for Bloomberg, kicks off our Top 5 this week by uncovering the hidden costs behind anything ‘free.’ A Wealth of Common Sense’s Ben Carlson considers the worst bear market. And Michael Harris, from Price Action Lab, checks out ominous market signs.
Abnormal Returns’ Tadas Viskanta promotes deciding on your investment principles before your plan. And The Reformed Broker Joshua Brown examines the effect of Treasury Bills…
The Hidden Costs of ‘Free’
- Cheap is an easy concept to understand; it’s the opposite of expensive and very good for investors due to the compounding effect of costs over time
- Investors should be wary of ‘free’ though—when being promised by a for-profit company; it usually means hidden costs are actually being concealed in the fine print
- While free exists as a concept outside of the financial services industry, it doesn’t within—be wary of any company that offers so
Slowly and Painfully
- Bonds in the U.S. have been subject to a prolonged bear market that’s never been seen before in history
- A bond market investor’s biggest fear is sky-high inflation, which is still a relatively new concept for the U.S as it wasn’t really experienced until the 1970s
- Stocks would be hurt by rising inflation as well, but bonds play out a long “death by a thousand cuts” due to deep risk which reduces your purchasing power slowly
- Recently, a chart appeared in financial media which could mark a disturbing sign of troubling times ahead for the market
- During the end of October there were only five up days—a rare occurrence that only last happened around the market top in the year 2000
- Less than 8 up days over 21 can happen near tops, bottoms, over uptrends, and over downtrends which means we could be in for just about anything
How are you set for any signs of trouble ahead? Share your comments in the section below
Plan Wisely and Clearly
- In a recent Twitter survey, of the over 2,300 people polled, only 25% responded that they had a written investment plan
- Those who work with a financial advisor are far more likely to have something that looks like an investment policy statement outlined than those who don’t—as the rest of us can have a slight aversion when it comes to writing things down
- To get the ball rolling on your written plan and process, first outline your investment principles or philosophy first to help you navigate
Is Change on the Horizon?
- The normalization of interest rates has become an increasingly popular topic on investors’ radars as the 10-year Treasury yield is now above 3%
- Less well known is the fact that 1 to 3 month T-Bills are returning around 2%, which is by no means a negative issue, but it does mean that companies are starting to reconsider plans and capital structure
- It will be interesting to watch if this cost to raising cash will affect the recent years of empire building moving forward
Top 5 of the Week is a summarized collection of financial investment articles that we like and think you might like too. Having written thousands of pages of equity strategy and company research between us, we understand the allure of the ever-changing world of finance. Investing is an art form—and like everything, something you can work on and improve at. There are some excellent writers out there on the finance web, some offer a running commentary on today’s market, some are doing research, some have tips on how to Become a Better Investor, and some just lift the cloud of fog behind a lot of financial jargon. Each week we will keep you up to date with the top 5 articles worthy of your attention.
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DISCLAIMER: This content is for information purposes only. It is not intended to be investment advice. Readers should not consider statements made by the author(s) as formal recommendations and should consult their financial advisor before making any investment decisions. While the information provided is believed to be accurate, it may include errors or inaccuracies. The author(s) cannot be held liable for any actions taken as a result of reading this article. The Become a Better Investor Team doesn’t necessarily endorse any stocks or shares mentioned in the articles or the author of such articles linked to and summarized in Top 5 of the Week and cannot guarantee the accuracy of its information.