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Why You Probably Won’t Survive the Next Bear Market

by: Lawrence Hamtil  on Tuesday, February 28, 2017

The coming of a bear market is inevitable, but it is doubtful that you are prepared for it.  The reason, I believe, is that the bear market you envision is not likely to be the one that occurs at all.  Many bear markets are cyclical, and can occur with a sudden crash only to recover almost as quickly, as in October of 1987.  Others can be decades-long deflationary grinds that demoralize even the hardiest of bulls, and that can make an entire generation swear off equity investing, such as the current market in Japan. Read More

Non-Financial Activities Can Improve Your Investment Behavior

by: Lawrence Hamtil  on Friday, February 24, 2017

Even though I am a financial professional, I cannot say with any degree of certainty that I am a better investor than anyone else.  I typically embrace a minimalist lifestyle - much to my wife's chagrin - in all aspects of my life, and our investments are no different.  For example, I tend to invest in companies that I deem to have decent prospects, and I monitor their performance very infrequently.  Because investing is essentially weighing probabilities and placing a bet on the future, I understand there is a great deal of chance involved, so I assume a minimalist, long-term approach will tilt the odds in my favor by reducing known impediments to success such as high fees and too much activity. Read More

Not All Innovations Are Revolutionary

by: Lawrence Hamtil  on Thursday, February 23, 2017

It is no secret that economic growth has been frustratingly slow for many years now.  There are many explanations for this continued phenomenon:  an increased public debt burden that is thought to have crowded out the private sector; a slew of new regulatory and tax burdens; and, perhaps most plausibly, an alarming decline in rate of productivity growth, which recently registered the weakest 5-year increase since the double-dip recession of the early 1980s.   Read More

Not All European Stocks Have Lagged

by: Lawrence Hamtil  on Thursday, February 23, 2017

When comparing global equity markets, the tendency is to use the large capitalization equity indices as proxies.  This makes sense as the large capitalization stocks that compose these indices are typically the most well-known and consequential stocks in a given market.  These large companies also tend to be multinationals, and are thus usually the most exposed to the global economy, while the fortunes of small-cap stocks tend to be more aligned with the goings-on of the local economy in question.   Read More

Of Pessimism and Pride

by: Lawrence Hamtil  on Friday, February 17, 2017

If I were to tabulate the total number of articles sent to me by clients and colleagues about the market and projections for its future, I can safely say that close to 90% of those articles were of the extremely pessimistic variety.  This is to be expected; it is well-documented that negative headlines and dire predictions get far more attention than reports of the mundane.  If you are in the media business, your job is to entice interest, and, unfortunately, it seems that there is a large market for the consumption of pessimism, no matter how far-fetched the claim, let alone how little the probability of some apocalyptic event occurring. Read More

Of Incumbency and Profits

by: Lawrence Hamtil  on Wednesday, February 15, 2017

Since the 1940s, corporate profits have shown a tendency to mean-revert, meaning that, as a percentage of gross domestic product (or GDP), they have tended to bounce around an average of  6-6.5%.  However, over recent years, that percentage has stayed well above the historical mean, averaging 9.6% since 2010: Read More

How Retirement Plans Changed How We Own Stocks

by: Lawrence Hamtil  on Thursday, February 09, 2017

The Tax Policy Center recently published a study that breaks down the ownership of American equities.  The findings are astounding.  Compared to 1965, ownership of equities in taxable accounts is down roughly 80%.  The bulk of equities are now owned in tax-deferred retirement accounts: Read More