- - Page 2 of 11 The Finance Gourmet

Stock Market Trading Sideways

April 19, 2022April 5, 2022 by Finance Gourmet

Update: It’s been 15 days of breathless up and down headlines from the financial media since I first wrote this article, and the stock market is STILL trading sideways. Take a look at three months of the Dow. The stock market often trades “sideways” as it consolidates after moves up or down. This is very common after big run-ups or drops, as well as when the economy is sort of waiting to see what happens. Of course, the stock market doesn’t literally trade sideways with the S&P 500 chart moving to the right as some sort of straight line. Instead, the market goes up and down, sometimes daily, sometimes over a period of a few days, all with the eventually outcome of having not moved up or down much at all. However, that doesn’t make for a clickable headline for financial reporters and financial news sites. So instead, we see things like this from Marketwatch. U.S. stocks fell Tuesday, with the Nasdaq Composite leading the way down after the previous session’s technology sector gains, as investors kept a close eye on plans for more sanctions on Russia and remarks by Federal Reserve policy makers. Nasdaq leads stocks lower as investors …

Are Gold Mutual Funds a Good Way to Invest In Gold?

February 9, 2023March 9, 2022 by Finance Gourmet

Recently, a client explained to me how he thought gold was a good investment and protection against inflation. I’m not going to talk today about if he is right or wrong. Instead, I’ll mention that his fabulous do it yourself investment solution was Fidelity’s Gold Fund. Good call? Gold Mutual Fund Holdings Well, it came as quite a shock to him that actual gold is only the sixth biggest investment in the fund. Five bigger investments in the mutual fund are in companies that have something to do with the gold industry. Granted, those companies’ stock prices will be heavily influenced by the price of gold, but certainly not on a one-for-one basis, and it is very possible for gold companies to have problems (and thus lower stock prices) unrelated to gold prices. If the point of investing in gold is to get an alternative investment from the stock market itself, investing in the stock of gold-based companies does not achieve that goal. — Is Bitcoin better than gold for this purpose? Gold companies are very susceptible to environmental lawsuits and regulations. Not to mention, gold happens to be mined in some very unstable countries throughout the world. A military …

Russia Invades Ukraine

February 24, 2022 by Finance Gourmet

Thinking about your investments as war starts is kind of cold and calculating, but also perfectly natural. What should I do when Russia invades Ukraine? First, remember, investors do not like uncertainty. Nothing is more uncertain than the course of war. Expect a market downturn with every new development that isn’t the war ending. Second, remember that the markets tend to overreact to initial news because everyone is both reacting, and trying to predict how others will react. Third, remember if you have a well-diversified portfolio, this sort of thing should not affect your investing strategy. Markets go up and markets go down. As far as your long-term investments are concerned it doesn’t matter whether the markets went down because of war, or just a cyclical phase of the market cycle. Do not panic. Do not sell unless you were already planning it. Fourth, if you are actively investing for the long-term in your 401k, IRA, 529 plan, or whatever else, KEEP GOING. This is exactly how dollar cost averaging works for you. Your investments when the markets are down become your buying at the bottom in the future. Do not miss the opportunity. Dollar cost averaging does the work …

Market Correction… Barely

February 23, 2022 by Finance Gourmet

So, the S&P 500 closed low enough on Tuesday to make it 10% lower than its closing high on January 3rd marking, officially at least, a correction in the stock market. If you aren’t seeing a lot of fuss, that’s because it really isn’t that big of a deal. Back on January 3rd, you couldn’t swing a dead cat without hitting someone who thought the market was overvalued, that it had run up too high for too long. So, when the market began a slow sideways, sloping down, trend over a two-month period, nobody really worried about it. It’s as if those prices on January 3rd weren’t real and the market was getting back to reality. Even now, there are plenty of people out there saying that the market is still too high. They might be right, and frankly another two-month long drop down another 10 percent probably won’t be much of a fuss either. After all, while this correction is a market down 10 percent from its peak, it’s a market that is zero percent down from last October, and zero percent down since last July, and still very much up from before that. In other words, unless you …

Blaming the Fed

January 27, 2022 by Finance Gourmet

Selective amnesia and analysts dying to be “right” is contributing to a flood of inaccurate articles seeking to blame the Fed. I saw this in my Twitter feed this morning and I just couldn’t let it go by. It’s filled with the kind of half-truths and misinformation that builds an analyst’s career, unfortunately, but that doesn’t make it true. Here we go. According to this tweet, The Fed spent 12 years creating an “everything bubble,” a term so bizarre that it requires quotes. Oh, and the Fed didn’t spend 12 years creating this so-called everything bubble. Oh, and before we start pointing fingers, until THIS YEAR neither this analyst, nor almost any other was asking for the Fed to tighten monetary policy because the economy was teetering on a cliff and every bit of the stimulus was required to prevent the Great Recession II, or worse. Yep. For exactly, ONE MONTH, inflation has been a bit crazy. Too bad the graph they posted as “evidence” is so far zoomed out that you can’t see what really happened. Maybe they couldn’t find one that showed more recent events. Oh, wait! Here’s one. The crazy, reckless Fed that has been pumping up …

Dogs of the Dow 2022

February 3, 2022January 20, 2022 by Finance Gourmet

. I first heard of the Dogs of the Dow strategy back when Motley Fool was just becoming famous, largely based on the out-sized success of their investment in AOL as the Internet Bubble continued to swell. (Whew! There’s a lot of investing history, and investing lessons in that one sentence.) The Foolish Four was a supposed improvement on the Dogs of the Dow strategy. I never invested that way, and it turns out to have been a good move. As the year rolls over to 2022, there come the obligatory articles about which stocks are the 2022 Dogs of the Dow, and whether the Dogs of the Dow is a good investment strategy. So, I thought we’d take a quick look. What Is the Dogs of the Dow Strategy? The Dogs of the Dow is an investment strategy where an investor invests in the 10 stocks in the Dow Jones Industrial Average that have the highest dividend yield as of 12/31 on the first trading day of the year in equal amounts and then holds the stocks for the full year before repeating the process. The idea (which used to be true, but is less so these days) is …

Acorns Review Automated Investing Made Easy?

September 7, 2024January 8, 2022 by Finance Gourmet

Note: This Acorns review article has been updated with the latest information as published on the acorns.com website. No sooner than I finished my Digit review, than I saw an ad for another automated savings app on Facebook that takes a different tack for building up your savings automatically with the help of an app and online financial service. This one is called Acorns. Let’s check it out. Is Acorn legit? Is Acorns a scam? Read on while I do my Acorns app review. Acorns Review – Legit, Scam, Worthwhile? Acorns vs Digit Whereas Digit monitors your bank balance and transfers money its algorithm determines is “extra” into a savings account for you, Acorns rounds up the change on every purchase you make to the next whole dollar amount and automatically saves that money for you. Another version of this type of automatic investing and savings app is Grifin. Grifin does away the clever sounding “round up to the next dollar.” Grifin is a user-controlled automatic app investing. Instead of gathering up a few dollars’ worth of transfers and sending them down into mutual fund land, Grifin take every transaction you make and invests $1 in the stock you just bought something …

Dodge & Cox Stock Fund Analysis

January 13, 2022January 7, 2022 by Finance Gourmet

Updated January, 2022 Great Large Cap Value Stock Mutual Fund One of my favorite mutual funds is the Dodge & Cox Stock Fund (DODGX). This isn’t some flashy hey-look-at-me mutual fund. In fact, this is exactly the kind of fund that people started questioning during the Internet bubble, and that is a good thing. It did not get caught up in the Internet bubble like many other stock funds. Its returns of just 5.4% and 20.21% in 1998 and 1999 respectively earned it a lot of scorn when Janus Funds were near 100% returns, but the proof of greatness isn’t riding along with crowd hysteria. The proof of greatness comes in 2000 and 2001. When other funds were getting crushed, DODGX was making money! In 2002, it managed to drop just 10.5%, almost half of what others were losing. The real proof of greatness is that it did not achieve these results by hiding and investing in “safer” places. In 2003, when the market turned back up, they were right there. This is what a great fund looks like. Limited Time Offer? For the last several years, the Dodge & Cox Stock Fund has been closed to new investors, so …

Finding a Good Stock Trade

January 6, 2022 by Finance Gourmet

I preach that long-term investors should have a diversified portfolio tailored to their time frame and risk tolerance until I’m blue in the face around here. If you already have a that portfolio and you are fully funding it, only then should you think about shorter-term investing. Finding a good stock trade is the mission for short-term investing. What Is The Difference Between Trading and Investing? First, let me just say that day trading is a different thing. If you are interested in day trading, you’ll have to read about that elsewhere. Second, what is the difference between a stock trade and a stock investment? The answer is your intentions. A trade is something you plan to start and complete. If you plan to hold the stock without a trigger for ending your ownership, then that is an investment. For example, if I think XYZ Corp is trading too low at $50 per share, I might buy XYZ Corp with the idea of selling it for $60 per share. Whether or not this ends up being a good trade depends on whether I do get to sell it for $60 per share, and how long it takes for that to …

Is There Really a Santa Claus Rally?

April 22, 2022December 16, 2021 by Finance Gourmet

There are so many investing maxims that it’s hard to know why anyone needs to do any research into stocks and bonds at all. I mean, how hard can it be to invest? Why do people put so much effort into it? At any time of year, there is a tried-and-true maxim to tell you where to invest your money right now. Stock Market Sayings *To the tune of Here Comes Santa Clause* Here comes platitudes, here comes platitudes… *End song* The most famous Wall Street market saying is: Sell in May, then go away. It rhymes! It must be true. The idea is that historically the market sort-of, kind-of, under-performs during the summer months. Of course, there are plenty of years where this isn’t true, especially now that Manhattan bankers don’t head for the country and stay there all summer long. There’s also a Super Bowl Stock Market Indicator which says that if the team from the AFC Division wins the Superbowl, then the market will have a down year. Conversely, if the NFC Division team wins, then the market will have an up year. My personal favorite is the Hemline Theory, or the Skirt Length Theory which suggests …