You Must Defend Your Wealth with a Tactical Battle Plan

There’s nothing more important to your investment success than protecting your principal. Capital gains will come and go, but losing the money you worked hard to earn is like taking a direct hit from a Scud missile. You need to build a tactical battle plan to kill the enemy—in this case, risk—and to win. Here’s the battle plan I laid out for readers shortly after Operation Desert Storm, and I remain committed to it today. You’ll Be The Big Winner! General Norman Schwarzkopf built the allied forces military victory in the Middle East on diversity. Schwarzkopf did not go into battle single-handed. Given the mental make-up of Saddam Hussein, the American general had no idea what might be … [Read More...]

One More Reason You Shouldn’t Invest in China

The coronavirus is just one more reason you should avoid direct investment in China. Symptoms of a bigger problem are the decisions of the Chinese government to: restrict information on the spread of the virus, deflect blame onto others, and to silence early attempts to alert the public to the problem. In 2012, I explained China’s bigger problem to readers, and why you should avoid the Middle Kingdom as an investment destination: China I have long advised against direct investment in China. Among the many reasons I am bearish on China is the country’s vastly distorted economy. China is a command style economy run by an unelected political party—the Communist Party of China … [Read More...]

How I Overcame My Biggest Investment Failure

Back in 1991, I had already been through multiple business cycles in my investing career. I wanted to teach investors how to avoid my biggest failure in investing up to that point. Here’s what I wrote: Reduce Risk with Betas Not only do I want to help you achieve an “A” in total-return performance, I want you to achieve this return with as little risk as possible. In the stock market, the words risk and volatility are synonymous. I want you to concentrate most of your efforts on stocks that are less volatile than average. What you need to know is a stock’s beta, or the measure of its volatility. A stock with a beta of 1.0 has characteristics of volatility that equal the average stock. A … [Read More...]

Should You Take the Dividend Blood Oath?

I have always been passionate about dividends, and if you learn to understand their power, you will be too. I even told readers in 2002 to take a blood oath to buy only dividend payers. Alarmed? While I was joking about the blood oath, I was very serious about the power of dividends in an investment portfolio, and I still am. Here’s what I wrote: As to dividends, not long ago, Fortune ran a nice piece, “Reap the Dividends.” Fortune wrote, “According to Ibbotson Associates (I love their work), if you had invested $100 in the S&P 500 in 1926 and continually reinvested the dividends, that stake would be worth $247,352 today. Without dividends that same $100 would now be worth just … [Read More...]

What the Iran Situation Means for Gold

Since the end of 2019, gold prices have been on a breakout trajectory. Now, in response to rising tensions with Iran, things are getting very interesting. The news that the United States had bombed Iranian Major General Qassem Soleimani increased the perception of risk in the Middle East, and drove the price of gold even higher. I have always suggested to investors that they maintain a gold component in their portfolios, not as a road to riches, but as an insurance policy against inflation, disaster, and war. Typically when every other assets’ price is falling, gold’s is rising. Here’s how I explained it back in 1986: Throughout history gold has been the money of last resort. Every … [Read More...]

Did You Get AirPods for Christmas?

At the turn of the century, the most popular Christmas gifts among America’s young teens were Pokemon playing cards and merchandise. Now, 20 years later, the hottest gift for Christmas is Apple’s AirPods. The pro version of the small wireless headphones cost $249 (before taxes). Shortly after the kids opened their gifts on Christmas 1999, I was writing about a new technology I thought would be significant in the coming years: Bluetooth. Through inference reading and analysis, I had determined that Bluetooth could be a major innovation in technology. As it turns out, it is the very technology that allows Apple’s AirPods and billions of other devices to communicate.   I wrote back … [Read More...]

Can You Live Forever? How about Your Investment Portfolio?

A recent study performed by Australian scientists found that the human genome predicts the species’ lifespan to be about 38 years. Modern scientific discoveries and improvements in the standard of living have increased that to about 72 years worldwide and much higher in some developed countries. It should come as no surprise that the longer you live beyond the day you retire, the more you’ll spend during retirement on maintaining your standard of living. How long can you do that? 20 years? 500 years? Here’s how I explained the idea of living to 500, and how you can plan your investment portfolio for longevity. Will You Live Forever? How About 500 Years? In today’s brand-driven media … [Read More...]

Here’s How I Climbed on the Dividend Bandwagon

There are few histories as crucial to the course of my life as my awakening to the power of compound interest and the importance of dividends. Since my decision to climb on the dividend bandwagon, I have been an evangelist to hundreds of thousands of paid subscribers, and many more investors beyond. My message has been consistent and clear, and I don’t regret focusing on dividends a bit. Here’s how it all started. Back to Monterey and Woodstock I’ve been developing investment strategies for investors like you before The Association kicked off the 1967 Monterey International Pop Festival with “Along Comes Mary” or Richie Havens opened Woodstock in August 1969. I started soon after John F. … [Read More...]

The First Question You Should Ask Before Investing

If you are beginning your investment adventure, one of the first questions you may ask yourself is, “how do I diversify my investment portfolio?” Perhaps preceded by, “should I diversify?” While the answers to how you diversify are many, the answer to whether or not you should diversify is easy; yes, absolutely. Diversification can lower your risk and raise your returns at the same time. And diversifying can prevent you from feeling the full effects of a downturn in the prices of any single class of assets. Witness the Raw Power of Diversification Diversification isn’t only a tool to minimize losses when assets fall in value; it has the power to increase your return while lowering risk. … [Read More...]

You Must Find Investments that Fit Your Needs

In the past, I've explained to investors that they need to find investments that fit their needs. You must measure your needs against what I referred to as a “complete understanding of where we are in terms of both the economic and monetary cycles.” I wrote: I am not looking for the investment markets to do anything for me. I long ago positioned myself to wade through any form of financial market dislocation. I always evaluate risk before potential returns. I invest with a complete understanding of where we are in terms of both the economic and monetary cycles. Where I would invest new money at the start of a cycle is quite different from where I would invest in the latter stages of a … [Read More...]