Raising a 5-year-old has taught me a lot about setting expectations. A few nights ago, I gave him a 5-minute warning before bedtime. When I told him it was time, he jokingly stood up straight, saluted me, said “yes sir” and marched upstairs to brush his teeth. I’ve learned this “warning” technique after many failed attempts that involved me interrupting him in the middle of a game to send him to bed with no warning. When I do this, he is completely caught off guard and his reaction shows. The time he goes to bed is the same in either scenario. The only difference is whether his expectations were met.

Let me try to convince you that the same is true in the short-run for the stock market.  

Because of the variability of stock market returns in the short run, I steer clients away from short-term tactical changes to their portfolio and prefer to rely on the weighty evidence of history, along with long-term thematic trends in the market.

While no one has consistently and accurately predicted what the stock market is about to do, several well-respected firms provide long-term outlooks that have proven to be more accurate than short-term predictions.  

Below are the 2023 10-year estimates…

With interest rates rising for savings and CDs, I’ve had a few questions on whether or not CDs should take the place of bonds in a portfolio. After all, you can earn nearly the same interest rate on a 1-year CD (4.15%) as a 2-year Treasury (4.18%) as of January 19th…

As inflation soared in 2021, so did the rate you could earn risk-free on government I-bonds. I originally wrote about the benefits of these in January of last year. Later in the year, the starting interest rate peaked at nearly 10%. There was so much consumer interest in buying them, that the treasury website crashed the day before interest rates reset lower.

With inflation starting to come down, I have gotten a few questions about whether these bonds are still attractive…

Last year around this time I published an article, Potential Pitfalls In Bond Investing. What followed was the worst year for bonds in decades. I’d like to think I timed the article perfectly, but it was more a coincidence than anything. I watched over the years as the bond market composition changed dramatically, particularly the average maturity of bonds increasing by over 50% from 4 years to 6+ years in the past decade.

This resulted in a painful year for passive bond owners this year as long-term bonds got hammered. I wanted to reshare the post because the principles still apply as you consider how to invest in bonds going forward…