“The greater the risk, the greater the reward” is heard everywhere, including when it comes to the stock market. Riskier assets, such as emerging market stocks are riskier than bonds, and as a result, lead to greater returns over time. But what exactly is risk? The definition of risk is exposing oneself to danger, harm or loss. But risk is a general term. There are many examples of risks when investing. In this post, I will introduce you to most of the forms of risk when investing in the stock market. 9 Risks When Investing You Need To Understand #1. Business Risk Business risk is simply being involved in an industry. For example, a company that does business selling cars runs the risk of not selling cars because of a recession in the … [Read more...]
You Can’t Time The Market
Many investors buy into and sell out of the market more frequently than they should. They are trying to “time” the market. If you have never heard of market timing before, it is described as trying to pick when the stock market has hit a top or a bottom, and then buying into or selling out of the market accordingly. For example, if you are predicting that the market has hit the peak of the cycle, then you sell out of your holdings because the market has nowhere to go but down. Conversely, if you think the market has bottomed, meaning it won’t go any lower, then you invest all of your money since the market can only go up. The Problem With Market Timing There is only one problem with timing the market: it can’t be done. Just like no one … [Read more...]
Top Mutual Funds of 2012
According to US News and World Report, the following 10 mutual funds were the more popular funds in 2012 in terms of inflows (money being invested in the funds). Here is the list with the amount of inflows in parenthesis: DoubleLine Total Return Bond ($16 billion) PIMCO Total Return ($12.1 billion) Vanguard Total International Stock Index ($10 billion) Lord Abbett Short Duration Income Fund ($7.7 billion) PIMCO Income Fund ($7.1 billion) Vanguard Institutional Total Stock Market Index Fund ($7.1 billion) Vanguard Total Bond Market Index ($6.5 billion) Invesco Balanced-Risk Allocation ($5.7 billion) JPMorgan Large Cap Growth Fund ($5 billion) JPMorgan Core Bond Fund ($4.5 billion) Remember, these rankings are … [Read more...]
Bulls versus Bears and How Long They Live
Many of you have heard of the terms bull market and bear market, but you may not understand what they mean. Even more of you probably don’t know the average length of one of these runs either. I am hoping to clear this up for you in this post. Bull Market A bull market is used to refer to the stock market when it is trending up. The term bull is used because when a bull attacks, it thrusts its horns upward. When the market is rising, investors are optimistic and their confidence is high. This makes them invest more into the market, pushing prices up higher. As long as the optimism continues, so too will the bull market. You can look back at history and see a great bull run in the market from 1990 through 2000. During this time period, the … [Read more...]
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