Kevin Kroskey's Money & Mind

It is helpful to think of a combination of asset classes--emerging markets, U.S. or international stocks, treasury or corporate bonds, cash, etc.--as a recipe . And think of the individual funds that you own as the ingredients being used in the recipe. Both matter a great deal. And both determine the net investment results from your portfolio and how the food you eat will taste.   Emerging markets as an asset class have been a better performer than either US or international developed markets in 2014. But over the prior three years Emerging Markets had fallen out of favor and an unsophisticated investor may have not had the patience to realize the increased expected returns.   In October 2013 I wrote Emerging Markets and Kenny Rogers' "The Gambler,"     "If anything, one should consider increasing their targeted allocation to emerging markets, precisely because they have had such a bumpy ride recently. After all, price and value are inversely re...

As a new parent, I'm already gauging my child's development for rolling over, sitting up, speaking her first word -- 'dadas' just last week! -- and more against guidelines in the plethora of parenting books I have. This relative comparison gives my wife and I feedback as to how our little bundle of joy is doing. Later, we'll get this relative comparison and feedback from her school grades and achievement tests among other sources.   Investors however tend to be more simplistic in their feedback mechanisms. They often define success as "My account went up last month. That's great!" Or conversely, "My account went down. It was a bad month." What's missing from this is a relative comparison asking the question, "Did my account go up or down as much as it should have given how much risk I am taking?" This involves a relative comparison against a representative benchmark.   The S&P Indices Versus Active (SPIVA®) report m...

The article below is a timely one from Dimensional Fund Advisor's (DFA) Jim Parker, VP of DFA Australia. Though Ireland is a country there are many lessons to be learned from Ireland's missteps by the individual investor. ---- Reaching understanding on the right way to invest often starts with studying bad investment decisions. But the lessons are far less painful when they are built on others’ experiences. Recent events in Europe provide case studies on what can go wrong when a wealth-building strategy is built on too much debt , too little diversification and too little awareness of risk. Ireland in recent years, for whatever reason, became heavily dependent on a couple of industries – namely construction and banking. The IMF1 in a report this year described the causes of these imbalances as “rapid credit growth, inflated property prices and high wage and price levels”. Now, an economy is clearly much more complex than any individual and the ability of governments ...

As a recent Newsweek cover asked, "Are We All Socialists Now?" And if so, should U.S. equity investors be alarmed by the prospect of greater government intervention in the economy? Historical data looking at this very question may be surprising to you. Click the link below to watch a short 6 minute video, which provides some objective comparisons of stock market returns from the more free-market system in the U.S. compared to the returns from more interventionist governments from around the world. The evidence suggests that government intervention is just one factor among many affecting stock returns, and that an above-average degree of intervention is not necessarily associated with below-average returns. https://admin.acrobat.com/_a772887163/governmentinterventionandstockreturns/ To Your Prosperity ~ Kevin Kroskey