Is It Now Safe to Invest in the Stock Market?

All time highs and continued growth in the stock market seem to scare investors.  You can hear fears of a pull back on any media outlet you prefer.  But  Perhaps one of the biggest challenges that investors face is determining if “right now” is a safe time to invest (meaning not just the present, but any time). What makes it difficult for investors is a twofold issue: first, is a lack of historical knowledge and perspective, and second, their own emotions. Actually, if one looks back on an historical basis, it would have appeared that there was no safe period in which to invest. Investors are really funny in this regard (actually most advisors are really no better). In 2009 investors were in shell shock coming out of the 2008 financial debacle. By 2015 it was really too good and couldn’t last. Then came the Trump Election, which people thought would most definitely crash the market.    What investors are looking for is something that does not exist—ever—a “Goldilocks” market!

I’m going to take some historical facts and figures to provide some historical context that may enable my clients to feel more comfortable when faced with the ongoing question of “is it safe.”
The first issue that investors must confront is that there is no such thing as a “safe” investment and this applies whether funds are invested in equities, bonds, government fixed income, gold, real estate, your mattress or in a coffee can in the back yard. Your money is always subject to one form of risk or another. For a more complete discussion on this subject read Main Street Money by Mark Matson. If you don’t have a copy let me know and I will get you one.
In this blog, I’ll confine myself to discussing equities and fixed income contained within a diversified portfolio that is periodically rebalanced, with dividends and capital gains reinvested, because that is what we do with our client’s money. Let’s take a decade by decade look at all the challenges investors have faced.

• 1917-23 Russian Civil War
• 1922 Mussolini takes control of Italy (eliminates private ownership, total government control!! Hmm!)
• 1923 Hyperinflation in Germany
• 1926+27 Chinese Civil War
• 1929 Wall Street Crash
• 1929-39 Great Depression
A horrible period to be invested in the market—manic market followed by the 1929 crash. Yet a fully diversified portfolio had $100,000 growing to $135,000 at the end of the decade.

• 1932-33 Holodomor Starvation
• 1933 The Nazi Party come into power
• 1933-45 The Jewish Holocaust
• 1935 US Presidential Candidate Assassinated (Huey Long)
• 1935-1936 Italian/Abyssinian War
• 1936-38 Stalin Purges (including Gulag Death Camps)
• 1936-39 Spanish Civil War
• 1937 The Hindenburg Airship Explodes
• 1939-45 World War II
Talk about a horrific period to begin investing? Probably the worst ten year period, economically we have ever experienced. Yet, $100,000 invested at the beginning of the decade grew to $152,000.

• 1933-45 The Jewish Holocaust continued
• 1939-45 World War II continued
• 1945 President Roosevelt dies before the war ends
• 1945 Eastern Europe is dominated by Communist USSR
• 1949-1993 The Cold War
What could be a worse time to begin investing as Word War II was starting, followed by the beginning of the Cold War. Let me interject an investment factoid here. The renown international investor, Sir John Templeton made his initial reputation by borrowing $10,000 and buying 100 shares of every stock on the New Your Stock Exchange selling for less than $1 at the start of the war.
If you had controlled your anxiety, like Sir John, and invested $100,000 at the start of the decade, you would have been amply rewarded by seeing that investment grow to $336,000!

• 1949-93 The Cold War continues
• 1950-53 The Korean War
• 1951 Mao Zedong takes power in China
• 1956 Suez Canal Crisis
• 1956 Russian quashing of the Hungarian Revolution
• 1959 The Cuban Revolution
• 1959-75 The Vietnam War
This was supposedly the boring decade under President Eisenhower. However, international events didn’t take a holiday and they continued to swirl about us creating many excuses for avoiding the assumption of any investment risk.
Nevertheless, investors who ignored events and invested $100,000 at the start of the decade had $393,000 in their portfolios at the end of the decade.

• 1949-93 The Cold War continues
• 1959-75 The Vietnam War continues
• 1961 The Berlin Wall built
• 1962 The Cuban Missile Crisis
• 1963 JFK Assassinated
• 1964 China explodes its first nuclear bomb
• 1967 Six Day Israeli/Egypt War
• 1968 MLK and RFK assassinated—rioting in major cities
• 1969 Libyan Revolution—Khaddafi comes to power
This was the decade where we got to watch both national and international occurrences in almost “real time” thanks to the expansion of television and global communications. An event filled decade both home and abroad. Plenty of excused could be found as to why it was not safe to invest. Yet again, $100,000 invested at the start of the decade produced a portfolio worth $259,000 by the end of the decade.

• 1949-93 The Cold War continues
• 1959-75 The Vietnam War continues
• 1970 The beginning of Terrorism in the world
• 1972 Kidnap and murder of Israeli Athletes at Olympics Games
• 1972 President Nixon resigns
• 1975-79 Khmer Rued in Cambodia (Genocide)
• 1979 Saddam Hussein comes to power
• 1979-1981 Iranian kidnapping of U.S. Embassy and diplomats
This decade begins with Vietnam, followed by the Nixon resignation, then the Iranian Embassy kidnapping, and ends with President Carter’s “malaise.” Gas lines, international problems, national embarrassment and a Russian bear looking more ominous.
Yet somehow if one was courageous enough to invest $100,000 at the beginning of the decade, it would have grown to $271,000.

I could go on with the history lesson, but suffice it to say that the 80’s decade rewarded $100,000 by growing to $453,000. In the 90’s it grew to$338,000.
This last decade, which was sort of known as the “lost decade” because of the bubble, the real estate bubble. This resulted in two severe bear markets. Still investors were rewarded by having their portfolio vastly outperform the underlying cost of living and inflation.
So the lesson for all is that if one pays attention to events, you can always find a reason why it is not a good time to invest—and historically, you would have always been wrong!! I will not say anything about the world we find ourselves in today because we have always found ourselves in difficult times both domestically and globally—there have always been challenges and there always will—it is just the nature of the species.
As to the basic question: Is it safe? I’ll let you draw your own conclusions!

By Jim Hancock


Source of returns figures for the various asset classes utilized in the hypothetical portfolio: DFA Returns Software 2.0, Feb. 2011. Past performance is no guarantee of future results. Performance included reinvestment of all dividend and capital gains.

1.Taylor, Fred. “Commentary: Is It Safe?” Message to the author. 6 Aug. 2014. E-mail.

2. Matson Money. But This Time it Really is Different. N.p.: n.p., n.d. PDF.

Bitcoin: Are you Missing Out?

Do you suffer from FOMO?  FOMO stands for Fear Of Missing Out.  Just about everyone suffers from this in one way or another.  Bitcoin is becoming more of a household word and it’s popularity is exploding. So what is bitcoin, and is it something you should invest in?

What is Bitcoin?

Bitcoin is a form of cryptocurrency that only exists in numbers on a computer screen, rather than an actual coin or physical dollar bill. It is a form of international currency and it is the first decentralized digital currency in the world.   You can buy bitcoin from any online bitcoin seller, by trading your dollars for bitcoin.  There are many other types of cryptocurrency now trying to surpass bitcoin in popularity.

Why is Bitcoin so popular right now?

The price of 1 Bitcoin started out close to $1 back in 2011, and now the price of 1 bitcoin is about $17,000. Even just a month ago it was well under $10,000!  That is some pretty extreme price fluctuation and growth.  Also, just recently, trading futures of Bitcoin became available, and ETF’s with Bitcoin are coming soon.

Should you invest in (buy) Bitcoin?

Investing in Bitcoin is much more similar to gambling, than it is to prudent stock market investing.   Yes, if you buy Bitcoin now, you could be filthy rich in a year, but you could also be completely broke too.   There is so many regulatory issues that Bitcoin has not made it through yet, and there have been several instances of bitcoin price manipulation and fraud.

My main suggestion when it comes to Bitcoin is to only use money that you absolutely do not need and could live without to invest in Bitcoin.  If you have the desire and want to try it out, go right ahead, but not with grocery or retirement money.

I have personally been watching the price of Bitcoin over the last few weeks, and the price swings have been pretty extreme on a daily basis.  The price volatility seems to be about 10 times more extreme than the price volatility of the stock market.   For now, most of the price swings have been up.

Over the coming weeks and months, you will hear many “investing gurus” or maybe even radio commercials hyping the potential to get rich investing in Bitcoin.

Buying Bitcoin without actually Buying Bitcoin

The prudent way to invest in Bitcoin, is by investing in a globally diversified stock portfolio.  In this way, you are in turn investing in some companies that buy, sell, and accept Bitcoin.  In this way you take a lot of the risk out of it, and get more steady returns.  Your Fear Of Missing Out senses might not be quenched, but you will be able to sleep better at night.

(Update: From the time I wrote this 2 days ago to now, the price of Bitcoin went up to over $18,000, and is now down below $17,000.)

By Jimmy Hancock


Solin, Dan. “Bitcoin in Perspective.” The Huffington Post,, 14 Dec. 2017,


Do You Have the Investor Instinct?

choose instinctsMany investors and young potential investors are still scared out of their minds because of what happened to a lot of innocent investors in 2008.  I have heard a few horror stories of people who supposedly lost all of their retirement money because of the crash.  Many young professionals are scared of the stock market because of the stories they have heard from their parents and grandparents.  But is the stock market really the issue, or is bad decision making also involved?

The Horror Story known as 2008

This is what happened to the average investor in 2008, instincts kicked in.  What I mean by that is that the average investor thinks that when the stock market is headed downward, it is going to keep going downward in a never ending spiral until the world ends.  That is just our instinct as human beings.  So as an investor, the obvious thing to do if you believe that, is to take your money out of stocks and put it in bonds, a bank account, or even under your mattress.  But the term that I use for that is selling low.  By the time most investors could get their money out of the stock market in 2008-2009,  it was already down 20 maybe even 40%.    Let’s take a look at the numbers.

Pain and Pleasure

On your statement at the end of 2008 you see that your small US stocks were down 38.67%.  You lost almost half of your hard earned money!  You also notice on the news that long term bonds were up 25.8% during 2008.  What does instinct tell you to do?  It tells you to leave the pain that stocks are inflicting upon you and go to the pleasure of bonds.   But is that really the best decision?

Regardless of what we know happened after the crash, it is ALWAYS a bad decision to sell low, and buy high.  But in the moment it doesn’t seem like that is what you are doing.  So let’s say you sold out of stocks and bought into bonds at the beginning of 2009.  Then at the end of 2009 you get this horrifying statement.  Long term bonds are down 14.09%.  What?  How could this happen?  You then search online and see that small US stocks were up 47.54%!   You managed to lose half of your money while those stock investors who didn’t do anything during this time did twice as good and made their money back.

I personally know people who did this, and their families are now forever afraid of the stock market.   These people blame the stock market when it was really their own emotions and fear that was the problem.   The stock market is way higher than it was before the crash in 2008 and continues to reach new highs as usual.

The Success Story known as 2008

Those investors who saw the largely negative numbers and heard the panic throughout the world, yet stayed disciplined made out like a bandit.   The best investors did exactly the opposite of what instincts told them to do, that is they bought more into stocks when the crash was happening and the prices were discounted, and sold some bonds while they were high.  Those people especially have been rewarded for their discipline.

The Next Crash

We all know crashes are a part of the stock market and are a regular thing.  The stock market has always come back lightning fast after a crash.  So are you going to go with your instinct and panic, or are you going to stay disciplined.

By Jimmy Hancock


1. Matson Money. Mind Over Money Powerpoint. Mason, OH: Matson Money, 2 Aug. 2016. PPT.

2. Graphic Design Schools. Digital image. N.p., n.d. Web. 2 Aug. 2016.


Value Stocks vs Growth Stocks: Which is better?

Value and growth are a little bit more technical terms than most investors understand, but what I want to teach today is how investing in stocks can be a science rather than a guessing game or a luck game. We have looked at Nobel Prize winning data to figure out exactly what type of stocks have the highest expected return based on history of the last 80 plus years.  Today we are going to tackle one small section of what type of stocks you should be investing in.  The Value Stocks vs. Growth Stocks discussion.

Value Stock– A stock that has a low price compared to it’s financial data, usually because investors don’t “feel good” about that company.

Growth Stock – A stock that has a high price compared to it’s financial data, usually because investors expect that company to grow very fast.

Which one is better?

You might think that growth stocks (S&P 500) might have more long term “growth” potential, but you would be wrong.  Check out this chart that proves exactly the opposite.


value vs growth

The chart is showing 2 examples of value beating growth.  First the green example with the first bar being value and the 3rd bar being growth.  Then identical with the blue bars.  As you can see on this chart, whether with large stocks or small stocks, there is a premium when you invest in value companies.  And it is not just a little difference.  Over 2% difference in large stocks, and over 6% in small stocks.  That is huge.   Did you know that the historical return for small value stocks is almost 15% per year.  Does that blow your mind?  Many surface investors miss out on this investing “secret” because this is not in the news or media.  Value companies are not popular and are rarely if ever talked about.  It is not cool to invest in value companies.

Why is that?

Because there is a greater risk involved in investing in these value companies, there is also a greater reward.  Value companies have low earnings and shaky financial health, thus they are riskier to invest in.  Just like banks would charge these companies a higher rate on loans, you the investor can expect a higher rate of return from investing in their stock.

Most financial advisors stay away from value companies because they are uninformed about how to prudently invest in these companies.   If you invest in widely diversified portfolio with at least some portion in bonds, you can increase your long term growth immensely by investing a greater percent of your portfolio in value and less in growth.

by Jimmy Hancock


1. Matson Money. Understanding the Dimensions of Risk and Return. N.p.: n.p., n.d. PPT.

Long Term Stock Market Returns

roiLooking at a chart covering the performance of the stock market over the last 30 plus years is a lot like looking at a chart of profitable business earnings at a cartoon enterprise meeting–it’s almost a caricature of itself, a steady upward slope shaped like a ski jump punctuated by regular but far-between drops, always ending higher than it was before.

When an economy and stock market is in the thick of a recession or stagnation, and a potentially scary election is coming up, it’s hard remember the long term potential the stock market has.    In the short term a financial crisis always seems like the end of the world, but, as looking at the data would suggest,  stocks always end up stronger than ever. The following is a look back at the last three decades, and all of the crises and triumphs contained within.

The 2000s: The early 2000s recession and the Global Financial Crisis of 2007-2008.

The 2000s were a tumultuous decade at best, between the big tech bubble that crashed in 2000 and 2001  and the abysmal 2008 crash, the drops were big and hit investors hard. But what most people still might not realize is that markets shot straight up in March of 2009 and have been on a steady mend since.

The 1990s: The Recession of 1990-1992.

The recession of the early 1990s was the largest recession since that of the early 1980s, but stock markets as a whole seemed to disregard any uncertainties as tech stocks especially had a boom period.  An investor invested in a diversified mix of stocks would have more than tripled their money if invested for the 90’s.

The 1980s:  Black Monday.

The most memorable stock market memory from the 80’s is known as black Monday in 1987, where the global markets crashed and the Dow Jones declined by a remarkable 22.61% in one day! 1  Talk about a scary day for investors.  But overall if investors stayed invested in a diversified mix of stocks for the whole decade they would have more then quadrupled their money.

While there has been a lot of doom and gloom over the years, the economy, and the stock market,  has always rebounded, stronger than ever. Much like the gradual upward spiking of stock market over the last 30 plus years, there will always be mountains and valleys and currently a plateau, but it’s important to remind ourselves not to panic when sitting on one of these long plateaus.

By Jimmy Hancock



  1. Browning, ES. “Exorcising Ghosts of Octobers Past.” WSJ. WSJ, 15 Oct. 2007. Web. 23 May 2016.

How to Beat the S&P 500

The S&P 500 is a grouping of the 500 largest companies in America.  It is a very popular thing to invest in for many reasons.  First of all, it is made up of incredible companies that we all know and love like Google and Apple.   But, another reason is, the business and financial media puts a lot of emphasis on shoving the current price and up or down movement of the S&P 500 in our faces every single day. For people that don’t know as much about investing, why would they even think there is something else to invest in then the S&P 500.

We recently met with a young man that was investing in only a low cost S&P 500 index fund.  He could not understand how he could pay a higher fee for a diversified portfolio, and end up with a huge advantage long term.   Let me explain further.

There are over 13,000 total stocks in the world that are available to invest in.  So the 500 stocks in the S&P 500 make up less than 5% of the total stock market.  So you cannot really consider yourself diversified if you invest in only 500 stocks in one country that are all very large companies.   If you could, wouldn’t you want to be more spread out into different countries, different industries, and different sizes of companies.  That way when 1 industry or country has major issues, your portfolio isn’t killed.

I’m here to tell you it is possible to beat the S&P 500 in terms of annual return, be more diversified, and lower your risk (Standard Deviation) all at the same time.

The mountain chart below shows that 3 globally diversified Matson Money Portfolios, with risk levels below or similar to the S&P 500 have absolutely blown away the returns of the S&P 500 for the long term 15 year period of 2000-2014.  And the Matson Money Portfolios shown below are Net of Fees, meaning this is the return after all fees are taken out. 1.


As you can see, the S&P 500 (100% stocks) was well below the Balanced Growth Portfolio, (50% stocks, 50% fixed income) the Long Term Growth Portfolio (75% stocks, 25% Fixed Income), as well as the Aggressive Growth Portfolio (95% stocks, 5% Fixed Income).    If you invested $100,000 into the S&P 500, your gain would be $86,482 at the end of 2014, which is about half the $162,523 gain you would have received investing in the Aggressive Growth Portfolio with Matson Money over the same time period.

Although the S&P 500 is popular, and has been up lately, that doesn’t mean you can forget the long term projections and academic studies that have proved again and again that a efficient diversified portfolio beats the S&P 500 in the long term.

By Jimmy Hancock


  1.  Matson Money. IsSomethingWrongWithOurPortfoliosPowerpoint. N.p.: Matson Money Inc., 6 Apr 2016. PPT.

Can you Lower Risk While Increasing Return?

Many people are scared of investing in stocks because they have heard that they are very risky.  Then on the other hand you have people who take investing risks that they don’t need to take in order to try to get a higher return.  Well today I hope to answer some questions for people on both sides.  

Modern Portfolio Theory

You may have heard the phrase Modern Portfolio Theory but what is it and how can it help your portfolio?

Modern Portfolio Theory-  An idea originated by Harry Markowitz in 1952 explaining the benefits of diversification, and the correlation of risk and return in an investment portfolio.

Harry Markowitz eventually won the Nobel Prize in Economics for his research on this topic.  He stated that as you add to the number of holdings in your investment portfolio, your risk should in turn go down.

Two kinds of risk

“Modern portfolio theory states that the risk for individual stock returns has two components:

Systematic Risk These are market risks that cannot be diversified away. Interest rates, recessions and wars are examples of systematic risks.

Unsystematic Risk– Also known as “specific risk”, this risk is specific to individual stocks and can be diversified away as you increase the number of stocks in your portfolio.” 1.

Modern Portfolio theory states that diversification helps to take away the unsystematic risk that comes along with any stock or even category of stocks.

The Efficient Frontier

Below is a chart created by Matson Money using the principles that Harry Markowitz found and taught.  The chart explains that for whatever amount of risk you are willing to take, there is an optimal return that you can get for that risk level.  The level of risk or volatility is measured by standard deviation.



There are 5 points on the chart that I would like to explain.  The first 4 are Matson Money portfolios.   The conservative portfolio is made up of 25% stocks and 75% fixed.  Moderate is 50/50, Growth is 75% stocks and 25% fixed, with Aggressive being 95% stocks and 5% Fixed.   Those 4 portfolio types fall on the efficient frontier.  This means that they are diversified to the point of efficiency and reach the highest expected return for the specific risk that you are taking.   Any point that is above that line is impractical in the long term, and anything below the line is inefficient.  

Should I Just Invest in the S&P 500?

Notice the S&P 500 is well below the efficiency line.  This means that for the amount of risk that is inherent in that group of stocks, the return is not optimal.   This is due to a few reasons; it only includes 500US stocks out of the almost 13,000 total stocks possible to own in the world, it does not include small or value companies with higher expected returns, nor does it include any fixed income to keep the standard deviation down.  If you wanted you could invest in a diversified growth fund and increase the expected return while decreasing the risk.  Keep in mind this chart and data is based on past performance, and past performance is no guarantee of future results.

The coolest thing about this is that the average investor can invest in a diversified portfolio that fits their risk tolerance by the way it is designed and know exactly what the risk and expected return is up front. 

We have software that can take your specific investments and show you exactly where you fall on the efficient frontier.   If you are interested contact us today. 

By Jimmy Hancock


1.”Modern Portfolio Theory: Why It’s Still Hip.” Investopedia. Investopedia US, n.d. Web. 13 Oct. 2014. <>.

2.Matson Money. TheEfficientFrontierPowerpoint. N.p.: Matson Money Inc., 6 May 2014. PPT.

2015 Market Analysis

2015The market had a very bumpy 2015, with a few scary drops, and some quick climbs.  The last quarter in specific stocks bounced back for most sectors after the downturn in quarter 3.  If you didn’t panic and sell out after the big drop in August, you were rewarded as the S&P 500 index was up over 7% for the 4th quarter.   Overall though, most sectors of the market saw a slight decrease in prices for the whole year.  The Russell 2500 (US Total Stock Index) was down 2.90% and the MSCI World (International Stock Index) was down 3.04%.  As for the Bonds, returns were positive, but not much to look at as the Citi Group World Government Bond Index (1-5 Year Bonds) was up 1.00%.

The following is a letter from Matson Money warning investors about panicking due to short term volatility in the market.
“Despite positive stock market performance for quite a number of years, many voices in the media and subsequently many investors seem to get caught up in the short term volatility rather than this long term steady upward climb. A common phrase that Matson Money likes to use says that “Investors don’t hate volatility, they only hate downside volatility”.
This highlights the difference in mindsets between long term investors and those that panic due to short term downward swings in the market and often hurt themselves because of it. A prudent investor knows that risk and return go hand in hand, and that without enduring the downward volatility, they wouldn’t be able to reap in the benefits of the upward volatility.”
“Historically the stock market has always gone up over the long run and the best way to miss out on that is to give into fear and sell in the short term. Discipline and a prudent investment strategy are not always for the faint of heart; over the lifetime of an investor they will see days, months, and years of negative returns. They will see times when one asset class like the S&P 500 outperforms a broadly diversified portfolio over a short time period, or even times when speculative assets like gold and commodities have huge run ups. Fear and greed are great motivators and even the most knowledgeable and stalwart investor will be tempted to react and rethink their investment philosophy when in the midst of a trying time, while the masses are shouting that this time is different. But if one can persevere and stay the course with an academically engineered, globally diversified portfolio and not give into the temptation of selling out when there is fear, or jumping on board when something is hot, the reward can be great.”
“Matson Money portfolios are designed to dial into academically proven dimensions of return. They contain 19 distinct asset classes that have some historically validated benefits of dissimilar price movement via low correlation and were intentionally chosen to exist together within the portfolio. They are engineered so as to not be dependent on any specific asset class, or any specific market condition. Investors can take heart that these portfolios don’t require a prediction of what the best asset class will be next year, or when the next market drop will occur.”
“In the end, choosing a wise financial strategy – and sticking to it – can have tremendous impact on an investor’s long term financial health. Chasing performance through buying and selling is a risky game. Historically speaking, it will only reduce an investor’s real return. Relying on unbiased, non-emotional advice from a trusted investor coach to make good decisions can help an investor bridge that gap between what the average investor makes and the return of the market.”

1. Matson Money. “Account Statement.” Letter to James Hancock. 18 Jan. 2016. MS. N.p.

The Genius of Rebalancing

balanceToday we are going to discuss the topic of Rebalancing your portfolio and why it is so important.  I will explain to you how a continuously rebalanced portfolio is one that is constantly buying low and selling high.  

 “Rebalancing -The process of realigning the weightings of one’s portfolio of assets. Rebalancing involves periodically buying or selling assets in your portfolio to maintain your original desired level of asset allocation.”

Rebalancing for Dummies

Rebalancing can be very complex and confusing, but I will give a simple example to explain some of the benefits.

For example, lets say you have a retirement portfolio with $50,000 invested in stocks, and $50,000 invested in fixed (Bonds and Money Market accounts). This is the 50/50 portfolio which is pretty safe and best for those closer to retirement.  So you let it go 1 year and lets say it was like 2013 and stocks had a great year.   After 1 year you now have $65,000 in stocks and $51,000 in the fixed portion.  You are no longer invested like you wanted to be, and are opening yourself up to way more risk than you originally planned on.   Rebalancing is then needed to sell off what is high, which stocks, and buy into what is low, fixed.  The beautiful thing about it is there is never a time when rebalancing forces you to buy high, or sell low.

Why doesnt everyone rebalance?

Rebalancing never seems like the right thing to do at the time.  For example in 2008 when stocks were plummeting, rebalancing would have been to sell safe fixed income to buy stocks.  If you think about it though, you are buying low and selling high.  During these times you need an investment coach to keep you off the ledge.

So by rebalancing a portfolio, what you are really doing is lowering the risk and keeping to your individual risk preferences.  That is really the main goal of rebalancing, but an added benefit is being able to consistently buy low and sell high.  This can help over the long term to increase your return as well.  

The Proof

Take a look at this chart by Forbes which visually explains all of this.


Rebalancing chart forbes


You can see from the chart that rebalancing really does its work when the downturns in the market come.  The chart shows that the rebalanced portfolio made more than the portfolio that was left alone, and with much lower risk.

Make sure that your money is invested with an investment coach that has a scientific and predetermined way for rebalancing your hard earned money.

By Jimmy Hancock



1.”Rebalancing Definition | Investopedia.” Investopedia. Investopedia US, n.d. Web. 17 Sept. 2014. <>.

2. Brown, Janet. The Impact of Rebalancing. Digital image. Forbes, 16 Nov. 2011. Web. 17 Sept. 2014. <>.

Are You Dollar Cost Averaging?

dollar costToday we are going to discuss dollar cost averaging (DCA) and how it is most likely helping your retirement portfolio.

Dollar Cost Averaging-  The technique of buying a fixed dollar amount of a particular investment on a regular schedule, regardless of the share price. More shares are purchased when prices are low, and fewer shares are bought when prices are high.”  1.

Dollar Cost Averaging for Dummies

So to put it more simply, dollar cost averaging is when you are investing in a type of investment that has shares (stocks or mutual funds) and you are putting in new money on a consistent basis.  You are investing the same amount of money each time, but buying a different amount of shares, due to the fluctuation of share price of a stock or mutual fund.

The Benefit of Dollar Cost Averaging

As it works out over time, because you are able to buy more shares in lower prices, the average price you pay is always lower than the average price of the stock/mutual fund.   It is hard to wrap my mind around it, but whether the price is going up, down or both, you will get your stocks at a discount using Dollar Cost Averaging.

Here is a very basic example.  If you put in $100 a month to a mutual fund priced at $10 per share the first month you would buy 10 shares for that price.  Let’s say the price goes up to $20 per share the second month, so your $100 would buy 5 shares.  So with dollar cost averaging you would have 15 shares after 2 months.  At the same average share price of $15, if you invested the same $200 you would only have 13.3 shares.

So most individual investors saving for retirement use DCA as they invest a monthly amount into their retirement account.   This makes sense and is obviously a good way to invest.  Much better than to try and time the market and only put money in when you feel the market is safe or poised to have a big run up.   It is also a way to put investing for retirement on the monthly budget and plan it in instead of having to make room for it.

Is Dollar Cost Averaging ever bad?

There is only one situation in which Dollar Cost Averaging is not the best option.    If you have a lump sum from receiving an inheritance, bonus,  or are just starting to invest, it is almost always best to invest the lump sum rather than putting it in slowly over time.   Let me explain.

Throughout history the market has ALWAYS gone up over the long term, meaning 10, 20 30 years.  There has never been a 20 year period where there has been  a loss in the market.  So the more shares you can buy now, usually the better you are.  If you wait to invest, odds are you are going to be buying at a higher price then you could have earlier.   Going back 88 years, 66 of those years have been up markets.  Going forward there is no way for us to know when the market will be up or down.

So the main reason people would rather use Dollar Cost Averaging over contributing a Lump Sum is FEAR.  They are scared the market will crash or take a big drop, because that is what they say on the news almost every single day.  They have been saying it ever since the market bounced back in 2009.   We should not let fear control our investment decisions.

For the average investor saving for retirement, consistent monthly contributions are the way to go, but if you ever do come across a lump sum of money that you want to invest, don’t wait to invest it.

By Jimmy Hancock


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