Recently a well know financial advisor wrote a very good article concerning the difference between investing process and investing outcome. It is easy to read and he provides some great examples so I encourage you to read it:
I have a client who is a big OU Sooner fan. I mentioned to him my hope that OU would stand a chance against the heavily favored Alabama Crimson Tide to which he responded in jest, "I hope you aren't putting MY money on an upset." After the game I could not help but see the parallel to this year's outcome and how people actually think about investing for retirement.
"I went to cash because..." Fill in the blank. This is a common phrase uttered by market pundits, advisors, and amateur investors everywhere. And there always is a seemingly very smart reason to justify putting your investments in cash instead of the market. However; what appears on the surface to be a good investing idea often stands in sharp contrast to the actual results.
There has been much discussion lately on the reliability of the suggested 4% withdrawal rate. It has long been held that withdrawing 4% from your retirement assets per year was a “safe” withdrawal rate. “Safe” means if the retiree starts taking 4% out of their portfolio when they retire and increase that amount by inflation each year then that income will last them the rest of their life. 4% became a rule-of-thumb even though it actually has strong academic backing. Recently, however, online articles and general advisor talk have suggested that given the current low rate environment or due to big market collapses like 2008 and 2009 a 4% withdrawal rate is no longer feasible.
By Eric Burkholder
There is a very good article out today on MarketWatch.com. "You are the best predictor of next bull or bear" The title is misleading but the theme of the article is this: There is no evidence that any person or any expert has any ability to predict mutual fund returns or forecast the economy. Actually, an even better summary of the article is in the affirmative: There IS significant evidence that traditional performance metrics cannot reliably predict mutual fund performance and there IS significant evidence that experts do a very poor job of predicting turning points in the economy.
In the era of perpetual reality TV offerings it is no surprise that Big Foot has finally nabbed his own TV series. And like most outrageous reality TV I caught myself watching for a few minutes.