Blog 2022-12-01T02:08:51+00:00

Articles of Interest

Core Investing Beliefs Part 2: Managing an Investment Portfolio

In the last post, we talked about our first core investing belief, that asset allocation is the most important decision in investment management. This post introduces our second core investing belief, that changing financial markets require continuous monitoring and tactical flexibility. This philosophy is contrary to the typical buy-and-hold approach that investors have been persuaded to embrace. Many people are convinced the proper way to invest is to simply leave their money in the market and hope for a decent return. We believe there is a better way! We feel investors should emulate the large, institutional investors by taking a more sophisticated, tactical approach to investing. At Willamette Investment Advisors, we maintain a forward-looking investment process that is focused on long-term [...]

Core Investing Beliefs Part 1

We have 2 primary investment beliefs: 1)   That asset allocation is the most important decision in investment management. 2)   That changing financial markets require continuous monitoring and tactical flexibility. This post focuses on asset allocation and we’ll address the second core belief in the next post. Asset Allocation is simply the term we use in the financial industry to describe how your money is invested in all of the various investment options available, and in what proportion.  For example, if you have a financial advisor making the asset allocation decisions for you, they are deciding how much you should be investing in US Large company stocks, how much in bonds, international stocks, etc. An important study by two Nobel Prize winning researchers [...]

Inflation or Deflation: Watching for Warning Signs

There's been much debate in investing circles over the last year about whether inflation or deflation represents a more likely threat to the future of the U.S. economy. With a recovery that's still tentative compared to previous recessions, measures designed to stimulate the economy or cut spending to rein in the budget deficit provoke warnings about their potential to create one or the other. The case for inflation As the economy has begun to recover, worries about the potential for future inflation have become widespread. The Fed has undertaken extraordinary measures to make sure there is plenty of money in circulation, but some experts worry that the increased money supply will eventually cut the dollar's purchasing power, especially if interest rates [...]

The Math of Losses

Everyone knows the stock market has its ups and downs, but just what’s involved in recovering from a serious down?  If you lose 10% one year but your portfolio returns 10% the next year, are you even again? The short answer:  no.  The math of recovering from a loss isn’t quite that symmetrical.  You have to gain more than you lost to recoup all your losses.  To understand why, let’s look at a hypothetical example.  Say you have a $100,000 portfolio.  In Year 1, you suffer a 10% loss and are down $10,000.  That leaves your portfolio worth only $90,000. In Year 2, the market rebounds and your portfolio rises by 10%.  However, that 10% increase is based on a $90,000 [...]

Finding The Right Financial Advisor

I recently re-read a few chapters of a good introductory book on investing called “The Art of Investing & Portfolio Management.”  I think one of the best chapters for individual investors to read is the chapter on what to look for when selecting a financial advisor.  Here are the bullet points (I’ve given you some expanded excerpts on the first two as I feel these are of critical importance): 1)      The Advisor Is a Registered Investment Advisor (RIA) “We strongly encourage you to work only with professionals who… are RIA’s.  The reason: RIA’s have a legal fiduciary responsibility to provide their clients with the highest possible standard of care.  As a fiduciary, an RIA is required by law to always look [...]

Converting a Traditional IRA or 401(k) into a Roth IRA

Assets in a Traditional IRA or 401(k) grow tax-deferred and distributions are taxable at ordinary income tax rates.  A Roth IRA grows tax deferred and distributions are tax free.  By converting your assets to a Roth IRA, you'll be paying your tax liability now - at a potentially lower rate-in exchange for tax-free growth and tax-free distributions in the future.  If you make the conversion in 2010 you can spread the tax bill out equally over two years (your 2011 and 2012 tax returns).  This special two-year provision is only available to conversions made in 2010. Unlike a traditional IRA, the government does not mandate you take required distributions from a Roth account.  Therefore, you can let the entire account grow [...]

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