Why All the Interest in Gold?

Why All the Interest in Gold?

By: Larry Swedroe The most common reason for buying gold is probably the belief that it acts as an inflation hedge. Despite this widely held conviction, historically, gold has been a poor hedge of inflation in the short run, and even for periods lasting as long as 20 years or greater. For example, on January 21, 1980, the price of gold hit what was at the time a record high of $850. On March 19, 2002, gold was trading at $293, way below where it had been more than 20 years earlier. The inflation rate for the period from 1980 through 2001 was 3.9%. Thus the loss in real purchasing power was about 85%. How can anyone claim that gold is an inflation hedge when, during a 22-year period, it lost 85% in real terms? And while we’re being selective in choosing our period start date, it’s now been more than 35.5 years since gold first hit $850 an ounce. With gold today trading at about $1,100 an ounce, that’s an increase of just 29%. In other words, gold has increased about 0.7% per year in nominal terms since that date in January 1980. During this period, inflation has increased at a rate of about 3.2%. That means gold has now provided negative real returns for the past 35.5 years, losing about 2.5% a year, producing a total loss in real terms of about 60%.  To continue reading, please click here.   By clicking on any of the links above, you acknowledge that they are solely for your convenience, and do not necessarily imply any affiliations, sponsorships, endorsements or...
When it Comes to Investing, Rely on Long-Term Wisdom

When it Comes to Investing, Rely on Long-Term Wisdom

By: Tim Maurer When it comes to the market’s peaks and troughs, investors often don’t react as rationally as they might think. In fact, in times of extreme volatility or poor performance, emotions threaten to commandeer our common sense and warp our memory. It’s called recency bias. Recency bias is basically the tendency to think that trends and patterns we observe in the recent past will continue in the future. It causes us to unhelpfully overweight our most recent memories and experiences when making investment decisions. We expect that an event is more likely to happen next because it just occurred, or less likely to happen because it hasn’t occurred for some time.  To continue reading, please click here.   By clicking on any of the links above, you acknowledge that they are solely for your convenience, and do not necessarily imply any affiliations, sponsorships, endorsements or representations whatsoever by us regarding third-party Web sites. We are not responsible for the content, availability or privacy policies of these sites, and shall not be responsible or liable for any information, opinions, advice, products or services available on or through them. The opinions expressed by featured authors are their own and may not accurately reflect those of the BAM ALLIANCE. This article is for general information only and is not intended to serve as specific financial, accounting or tax advice. © 2016, The BAM...
When the Stock Market Dips, Who Should Be Nervous?

When the Stock Market Dips, Who Should Be Nervous?

By:  Joe Delaney   I’ll answer the above question right away so you don’t have to bite your fingernails all the way through this post. The only people who should be nervous are those who (A) don’t know much about the stock market, and (B) don’t work with anyone who understands it better than they do.   You may have read that U.S. stocks recently had the biggest one-week dip in almost four years. That may seem like cause for concern at first glance, but those of us who work in wealth management are more apt to shrug our shoulders than bite our fingernails.   Why? Because, as we consistently remind our clients, sound investments are those that minimize risk and maximize return over the long term. It’s when novice investors strike out without this basic principle in mind that the August dip appears to be a crisis rather than a relatively minor bump in the road.   Financial Wisdom Fact of the Day: Fear is a short-term phenomenon; confidence is long-term.   There are a host of factors that caused the August dip, according to financial analysts. ABC News summed them up nicely: a slow-down in Chinese manufacturing, the inflexibility of the FED’s sustained 0% interest rate, continued uncertainty in the Greek economy, devaluation of currency in China and Kazakhstan, and lows in U.S. crude oil.   Though none of these factors is a surprise to investment professionals – all have been reported regularly in the news – when market reports reveal short-term changes, those who were depending upon short-term rewards react. Fear happens fast, and it’s not...
Do You Know When to Claim Social Security? And how?

Do You Know When to Claim Social Security? And how?

By:  Tim Maurer What’s the most important thing to know about Social Security? That you should wait as long as you can to take it. Tim Maurer explains some of Social Security’s uniquely strange elements, and why when you claim your benefit matters.  To watch this video, please click here.   By clicking on any of the links above, you acknowledge that they are solely for your convenience, and do not necessarily imply any affiliations, sponsorships, endorsements or representations whatsoever by us regarding third-party Web sites. We are not responsible for the content, availability or privacy policies of these sites, and shall not be responsible or liable for any information, opinions, advice, products or services available on or through them. The opinions expressed by featured authors are their own and may not accurately reflect those of the BAM ALLIANCE. This article is for general information only and is not intended to serve as specific financial, accounting or tax advice. © 2016, The BAM...
Your Spending Choices Often Reflect Your Values

Your Spending Choices Often Reflect Your Values

By: Carl Richards I have a crazy idea I want to run by you. Imagine that a cultural anthropologist finds one of your credit card statements in 100 years. What would your spending suggest you value the most? Based on your spending, what assumptions might someone make about how you live your life? Our credit card statements (really, any financial statement) reveal a lot about what we care about. They are unintentional personal manifestoes. In stark detail, these statements lay out how we spend our money and our time. As a result, we end up with a clear picture of what we value versus what we say we value. For instance, my top priorities are spending time with my family and serving in my community. In theory, every decision I make, every action I take, should be about meeting those priorities. But sometimes, my statements show I have made other things a priority. I get distracted.  To continue reading, please click...
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