Opinion

John Wasik

COLUMN: Do some spring rebalancing to reduce risk

Apr 5, 2012 20:12 UTC

CHICAGO, April 5 (Reuters) – To some, spring means cleaning,
renewal and yard work. For nervous Nellies like me who still see
the ghost rider of 2008 in my rear-view mirror despite the
market being up sharply so far in 2012, it means rebalancing my
portfolio.

There’s nothing sexy about rebalancing. You simply plod
through your account statements and reorient your nest egg
toward your objectives while lowering risk. The crux is that if
you do it right, you are purchasing less-favored assets and
selling higher-valued securities. In other words, you are buying
low and selling high, which is what most investors consistently
fail to do. Far too many folks buy on the way up and hope that
good times will continue indefinitely, thus ignoring the
downside risk.

If you don’t rebalance, your portfolio gradually becomes
dominated by higher-risk and potentially over-valued assets.
When the eventual correction or crash comes along, the resulting
fall is much steeper – if you haven’t rebalanced.

I took a peek at my portfolio recently, and due to the bull
run of late, I noticed that stocks comprised almost 58 percent
of our joint 401(k) and individual retirement account holdings.
Since my wife and I resolved that we’d never let stocks comprise
more than half of our portfolio, we’ll have to make some
adjustments. We still haven’t completely recovered from the
train wreck known as the 2008 meltdown. As you can imagine,
we’re more cautious these days.

For my family’s portfolio, based on my age of 54, I like to
invest at least half in fixed-income. As a rule of thumb, your
age should roughly match your target fixed-income allocation, if
you’re a moderate to conservative investor.

Green investing good for world, maybe not for you

Apr 2, 2012 18:59 UTC

CHICAGO (Reuters) – Want to vote with your dollars when it comes to environmental concerns? One way is to invest in environmentally focused mutual and exchange-traded funds, although you may be trading your green conscience for increased portfolio risk.

People who are concerned about energy prices and climate change have put more than $3 trillion into the hands of managers who target positive environmental, social and corporate governance practices, encompassing more than 250 investment funds, according to the Forum for Sustainable and Responsible Investment’s 2010 report on socially responsible investing.

Like any sector, environmental stocks are volatile. One year ethanol producers are hot, then sold off. Solar-panel manufacturers sizzle – and then fade.

COLUMN: Green investing good for world, but maybe not for you

Apr 2, 2012 16:27 UTC

CHICAGO, April 2 (Reuters) – Want to vote with your dollars
when it comes to environmental concerns? One way is to invest in
environmentally focused mutual and exchange-traded funds,
although you may be trading your green conscience for increased
portfolio risk.

People who are concerned about energy prices and climate
change have put more than $3 trillion into the hands of managers
who target positive environmental, social and corporate
governance practices, encompassing more than 250 investment
funds, according to the Forum for Sustainable and Responsible
Investment’s 2010 report on socially responsible investing.

Like any sector, environmental stocks are volatile. One year
ethanol producers are hot, then sold off. Solar-panel
manufacturers sizzle – and then fade.

In times of trouble, investors can build a bridge

Mar 26, 2012 13:20 UTC

CHICAGO (Reuters) – Having been a stock market investor during the worst downturns over the past quarter century, I’m naturally cautious about national economic shocks like recessions, inflation, bubbles and wars.

None of those threats have disappeared from my radar screen. But being a squeamish investor, as I’m watching the steady ascent of the U.S. stock market this year, I have one question: What should you be most afraid of?

I share the caution espoused by former Treasury Secretary Robert Rubin, whom I heard speak at the Chicago Council on Global Affairs on Thursday. “I’m an investor – a troubled investor – with a very deep concern,” Rubin said. “If we (the U.S.) don’t get on a sound fiscal trajectory, there will be a severe crisis in the bond and currency markets.”

COLUMN: In times of trouble, investors can build a bridge

Mar 23, 2012 20:55 UTC

CHICAGO, March 23 (Reuters) – Having been a stock
market investor during the worst downturns over the past quarter
century, I’m naturally cautious about national economic shocks
like recessions, inflation, bubbles and wars.

None of those threats have disappeared from my radar screen.
But being a squeamish investor, as I’m watching the steady
ascent of the U.S. stock market this year, I have one question:
What should you be most afraid of?

I share the caution espoused by former Treasury Secretary
Robert Rubin, whom I heard speak at the Chicago Council on
Global Affairs on Thursday. “I’m an investor – a troubled
investor – with a very deep concern,” Rubin said. “If we (the
U.S.) don’t get on a sound fiscal trajectory, there will be a
severe crisis in the bond and currency markets.”

The tech siren is calling: Should you listen?

Mar 20, 2012 13:43 UTC

CHICAGO (Reuters) – Once again the seductive siren call of technology stocks beckons investors. Especially after Apple announced a huge stock buyback Monday along with its first dividend since 1995.

Should you follow that call, or put wax in your ears the way Odysseus’s crew did when they passed the island of the seductive sirens?

There is always a safer course. Sure, technology share returns may be singing a pretty song right now. The S&P North American Technology Sector Index (Total Return) is up about 18 percent year to date through March 16, according to Standard and Poor’s. The sub-index for technology that tracks hardware has risen about 25 percent.

Column: The tech siren is calling: Should you listen?

Mar 19, 2012 21:31 UTC

CHICAGO (Reuters) – Once again the seductive siren call of technology stocks beckons investors. Especially after Apple announced a huge stock buyback Monday along with its first dividend since 1995.

Should you follow that call, or put wax in your ears the way Odysseus’s crew did when they passed the island of the seductive sirens?

There is always a safer course. Sure, technology share returns may be singing a pretty song right now. The S&P North American Technology Sector Index (Total Return) is up about 18 percent year to date through March 16, according to Standard and Poor’s. The sub-index for technology that tracks hardware has risen about 25 percent.

Is a ‘quickie’ refinancing deal worth it?

Mar 16, 2012 21:11 UTC

By John Wasik

(Reuters) – I got a letter from my bank the other day offering a streamlined refinancing deal for my current home mortgage. It was one of those “quickie” offers tailor-made for my loan situation and designed to net swift business for the bank.

What was advertised in the letter seemed like a decent deal — a 30-year, fixed-rate loan at a 4.16-percent annual percentage rate — so I called the bank for more details.

As it turns out, there was a lot of fine print that made it seem less decent, but I had to ask a lot of questions to find that out. While mortgage rates are still at generational lows, making it tempting to refinance, you have to scrutinize any deal that is offered. You may not even qualify for the appealing rates that get dangled in front of you.

Getting cash-cow corporations to share their wealth

Mar 12, 2012 20:48 UTC

CHICAGO (Reuters) – When a profitable company is sitting on tens of billions of dollars in idle cash, why can’t it automatically raise dividends to reward its shareholders? After all, with savings yields at dismal levels – and likely to remain so – those on fixed-incomes could use a boost.

But companies won’t share the wealth, and the reason why they won’t is an indictment of the U.S. government’s inaction on corporate tax loopholes.

The problem in Washington: Corporations are offshoring more than $2 trillion in corporate cash.

Getting cash-cow corporations to share their wealth: Wasik

Mar 12, 2012 20:09 UTC

CHICAGO, March 12 (Reuters) – When a profitable
company is sitting on tens of billions of dollars in idle cash,
why can’t it automatically raise dividends to reward its
shareholders? After all, with savings yields at dismal levels -
and likely to remain so – those on fixed-incomes could use a
boost.

But companies won’t share the wealth, and the reason why
they won’t is an indictment of the U.S. government’s inaction on
corporate tax loopholes.

The problem in Washington: Corporations are offshoring more
than $2 trillion in corporate cash.

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