Wall Street’s Wild Ride

Russ Harlan News, Wealth Management

We just witnessed the biggest 1-day point drop in the Dow Jones Industrial Average’s (DJIA) history. However, it’s not the biggest percentage drop to occur; it doesn’t even break the top 50. Remember black Monday in 1987, the Dow lost 508 points, that’s a 22.8% crash. The DJIA fell 1,175.21 points, or 4.6%, to 24,345.75. The other major indexes dropped about the same percentage. What does all of that mean? Too often we talk about the market as this nebulous term, an all-encompassing adjective when discussing fluctuation. I would like to take a moment to talk about what this drop means. Nothing. The recent down turn in the DJIA doesn’t mean that much in the grand scheme of things. Let’s …

Is Bitcoin the Future of Money?

Russ Harlan News, Wealth Management

Mayer Amschel Rothschild, the founding father of international finance, is reputed to have said, “Permit me to issue and control the money of a nation, and I care not who makes its laws!”1 Money and power are inextricably entwined. Most often it seems like those with the money ultimately decide who will be in power. Which makes the idea of a currency that cannot be manipulated by a government, or controlled by a central bank, a very popular one. In 2009, this libertarian ideal became a reality with the introduction of bitcoin. Purportedly developed by Satoshi Nakamoto (now regarded as a pseudonym), this so-called “cryptocurrency” allows you to pay for things without the involvement of a third-party broker, like a …

The Myth of Beating the Market

Russ Harlan Wealth Management

Americans have been talking a lot about the “fake news” phenomenon lately, but fake news has been part of the investment world for some time, on TV, online and at cocktail parties. How many “hot stocks” and “can’t fail strategies” have you heard about over the years? Maybe the idea that some stock guru has “the secret to beating the market” is as mythical as a unicorn. According to Dalbar, an independent research firm that has been studying investment performance and investor behavior since 1976, there is evidence that trying to beat the market does investors more harm than good. Their 22nd Annual Quantitative Analysis of Investor Behavior (2016) found that, for the 20-year period ending on December 31, 2015, …

Will You Do Better as an Active Investor or a Passive Investor?

Russ Harlan Wealth Management

It’s one of the most contentious debates in investing. Perhaps a more important question: which approach will be superior over the long term, active or passive investing? Active investing is when you proactively move assets (buying and selling) with the goal of beating relative market performance as measured by an index. Relying on trend analysis and your past experience, you seek to buy individual stocks, sectors and/or fund managers when they appear low with the plan to sell them when they’re higher. If you guess correctly, you have the potential for significant returns. But if you’re wrong, the results can be costly. Passive investing is when you buy a diverse mix of assets and reallocate your funds only when rebalancing …

Why Passive Investments are Popular

Russ Harlan Wealth Management

“We’ve long felt that the only value of stock forecasters is to make fortune tellers look good.” This classic quote from Warren Buffett encapsulates the guiding principle of passive investors, who prosper not by trying to do better than the stock market, but by mimicking it at a low cost. These investors are often proponents of index funds and ETFs (exchange-traded funds), which are “portfolios that match or track the components of a market index, such as the Standard & Poor’s 500 Index (S&P 500).”1 Active investors are those who try to beat the performance of the overall stock market by selecting stocks (or other investments, such as bonds, real estate or precious metals) whose value will grow faster than …