Opinion

John Wasik

What would Keynes have done?

Jan 27, 2014 17:33 UTC

CHICAGO (Reuters) – What many people don’t realize about economist John Maynard Keynes is that he was a professional investor, not just a thinker who addressed big issues. Although Keynes did not foresee the crash of 1929 and was nearly wiped out on three separate occasions, he made money during some of the most challenging years – and pioneered some durable investing principles along the way worth following in all market conditions.

So how would the father of Keynesian economics, who died in 1946, have played 2014?

He likely would not have been swayed by the recent swoon – the S&P 500 Index is down 3 percent year-to-date through January 24. He quickly threw out conventional wisdom and stopped trading based on big economic themes in the early 1930s, instead focusing on the intrinsic value of companies. This strategy later influenced mega-investors like Warren Buffett, George Soros and John Bogle.

When stocks were getting battered, Keynes was buying. He managed money for his alma mater, King’s College at University of Cambridge, as well as two British insurance companies, friends and family.

In researching my recent book “Keynes’s Way to Wealth,” (McGraw-Hill, 2013, ((link.reuters.com/gyf46v )) ), I discovered that Keynes made money in 12 out of 18 years between 1928 and 1945, a period that includes the Crash of 1929, the Great Depression and World War Two. All told, his annualized return for the Cambridge “Chest” portfolio, a discretionary portfolio he managed, was 13 percent from 1928 through 1945, compared with a negative 0.11 percent for the UK market during that period.

The portfolio rebalancing act: Feels bad, works good

Jan 21, 2014 20:30 UTC

CHICAGO, Jan 21 (Reuters) – For most investors, portfolio
rebalancing is an unnatural investment act. You sell off winners
to buy laggards – an unsatisfying move.

Over the long haul, though, rebalancing makes sense because
it lowers market risk and keeps you right with your investment
goals: You’ll reap a higher annualized return if you do it on a
regular basis.

I rebalance once a year, although I’d rather do my taxes,
which is marginally less unpleasant. This year my wife and I
have a particular need to rebalance since our main retirement
portfolio mix has drifted to nearly 60 percent stocks and 40
percent bonds away from our 50/50 allocation goal.

Will last year’s stock market laggards be 2014′s winners?

Jan 13, 2014 20:04 UTC

CHICAGO (Reuters) – If the stock market rally continues, last year’s laggards may be this year’s winners.

Many of the sectors that could do well are late bloomers in the five-year bull run. They may not seem like obvious choices, yet are worthwhile if you’re contrarian or slightly defensive.

Assuming economic fundamentals and corporate earnings remain solid, it could be a decent year for stocks overall and even better for companies that were neglected in 2013.

Column: Will the U.S. bull market continue?

Jan 6, 2014 19:40 UTC

CHICAGO (Reuters) – What are the odds that the U.S. stock market’s bull run will continue?

Despite last year’s record rise – the S&P 500 and Dow Jones industrial average both closed at all-time highs – it does not always follow that one good year will be succeeded by another. The stock market is often roiled by irrational fears, bubblicious greed and a constantly boiling pot of earnings reports.

Yet many pundits predict that corporate earnings and the global economy will continue to expand, so stocks may have another good year. Just don’t invest thinking you will see a repeat of the 26 percent return the S&P 500 Index posted last year.

Will the U.S. bull market continue?

Jan 6, 2014 19:14 UTC

CHICAGO, Jan 6 (Reuters) – What are the odds that the U.S.
stock market’s bull run will continue?

Despite last year’s record rise – the S&P 500 and Dow
Jones industrial average both closed at all-time highs -
it does not always follow that one good year will be succeeded
by another. The stock market is often roiled by irrational
fears, bubblicious greed and a constantly boiling pot of
earnings reports.

Yet many pundits predict that corporate earnings and the
global economy will continue to expand, so stocks may have
another good year. Just don’t invest thinking you will see a
repeat of the 26 percent return the S&P 500 Index posted last
year.

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