James48843
03-27-2008, 09:11 AM
Mike Causey's column this morning:
http://www.federalnewsradio.com/index.php?nid=7
titled:
Are You An Investor Or A Speculator?
03/27/08 02:00
These are the times that try men's portfolios. Womens' too.
And these are the times when many long-term investors (like folks in the TSP) should figure out whether they want to be investors or speculators.
Thanks to a booming stock market through much of the 1990s and for the past five years, most TSP investors were happier than pigs in organic matter. It was hard not to make money. The C, S and I funds were going great.
Now oil, inflation and gold are going up. Returns are going down.
What to do?
For most investors the best thing to do is nothing. That is: don't panic. The advice comes from Allan Roth, columnist and financial planner. He was a guest yesterday our my Your Turn (http://www.federalnewsradio.com/?sid=759670&nid=251) radio show, co-hosted by Francis Rose.
Roth said when following the stock market "we tend to chase what's hot and flee what's not!" In other words, we often buy high and sell low. For example the time to buy gold is probably not now, when it's hitting $1,000 an ounce. The time to buy, he said, was three or four years ago. But did we know that then?
Many investors, he said, suffer from what he calls a "recency bias." We forget the lessons of the past and live in the moment as if the boom, or bust, will last forever.
Roth is a big fan of the TSP because of its lowest-in-the-business administrative costs. Even some of the best mutual funds charge fees that are 67 percent higher than the TSPs costs. Over a career of investing, those low fees can translate into thousands of extra dollars in your account and possibly advance the date when you can afford to retire "by a decade."
There are several types of financial planners. Some sell products (like mutual funds). Others charge a commission (one or two percent) for managing your account. Others, like Roth, charge a fee (usually a one time) for hourly consultations. Here are some of his thoughts from yesterday's show:
These are not particularly unusual or scary times. The last five years of relentless gains were unusual.
How we handle pain right now is what will separate an investor from a speculator. Most of us will move out of stocks after they have gone down.
Down times are part of capitalism which encourage intelligent risk. These down times are part of the price of admission to the stock market.
Indexed funds (like the C, S and I funds) work just as well in a down market as in an up market.Many folks e-mailed us yesterday. They said they wanted to listen to the show but can't because of an agency firewall, the press of other duties, or because the dog ate their homework. The good news is that we archive the each show so you can listen, anytime, at your leisure. To do that for yesterday's show, click here (http://www.federalnewsradio.com/?sid=759670&nid=251).
To subscribe to Roth's monthly e-mail, click here (http://visitor.constantcontact.com/email.jsp?m=1101645273368).
Nearly Useless Factoid
Despite 17.5 miles of corridors in the Pentagon, it takes only seven minutes (http://pentagon.afis.osd.mil/facts.html) to walk between any two points in the building.
To reach me: mcausey@federalnewsradio.com
*****************************************
Nice article.
http://www.federalnewsradio.com/index.php?nid=7
titled:
Are You An Investor Or A Speculator?
03/27/08 02:00
These are the times that try men's portfolios. Womens' too.
And these are the times when many long-term investors (like folks in the TSP) should figure out whether they want to be investors or speculators.
Thanks to a booming stock market through much of the 1990s and for the past five years, most TSP investors were happier than pigs in organic matter. It was hard not to make money. The C, S and I funds were going great.
Now oil, inflation and gold are going up. Returns are going down.
What to do?
For most investors the best thing to do is nothing. That is: don't panic. The advice comes from Allan Roth, columnist and financial planner. He was a guest yesterday our my Your Turn (http://www.federalnewsradio.com/?sid=759670&nid=251) radio show, co-hosted by Francis Rose.
Roth said when following the stock market "we tend to chase what's hot and flee what's not!" In other words, we often buy high and sell low. For example the time to buy gold is probably not now, when it's hitting $1,000 an ounce. The time to buy, he said, was three or four years ago. But did we know that then?
Many investors, he said, suffer from what he calls a "recency bias." We forget the lessons of the past and live in the moment as if the boom, or bust, will last forever.
Roth is a big fan of the TSP because of its lowest-in-the-business administrative costs. Even some of the best mutual funds charge fees that are 67 percent higher than the TSPs costs. Over a career of investing, those low fees can translate into thousands of extra dollars in your account and possibly advance the date when you can afford to retire "by a decade."
There are several types of financial planners. Some sell products (like mutual funds). Others charge a commission (one or two percent) for managing your account. Others, like Roth, charge a fee (usually a one time) for hourly consultations. Here are some of his thoughts from yesterday's show:
These are not particularly unusual or scary times. The last five years of relentless gains were unusual.
How we handle pain right now is what will separate an investor from a speculator. Most of us will move out of stocks after they have gone down.
Down times are part of capitalism which encourage intelligent risk. These down times are part of the price of admission to the stock market.
Indexed funds (like the C, S and I funds) work just as well in a down market as in an up market.Many folks e-mailed us yesterday. They said they wanted to listen to the show but can't because of an agency firewall, the press of other duties, or because the dog ate their homework. The good news is that we archive the each show so you can listen, anytime, at your leisure. To do that for yesterday's show, click here (http://www.federalnewsradio.com/?sid=759670&nid=251).
To subscribe to Roth's monthly e-mail, click here (http://visitor.constantcontact.com/email.jsp?m=1101645273368).
Nearly Useless Factoid
Despite 17.5 miles of corridors in the Pentagon, it takes only seven minutes (http://pentagon.afis.osd.mil/facts.html) to walk between any two points in the building.
To reach me: mcausey@federalnewsradio.com
*****************************************
Nice article.