The key to designing a robust portfolio that can withstand a multitude of market pressures is choosing stocks and funds that have diversification across all asset types, investment styles and industry sectors . That way, if one part of the market struggles, other areas take up the slack and lift the portfolio. For instance, right now the best stock market gains are being achieved by a core group of technology and internet-based stocks that Wall Street dubbed the FAANG stocks. FAANG is an acronym that stands for Facebook, Apple, Amazon, Netflix and Google. We have invested in these stocks because we have been impressed by their fundamentals, and, as a result, we have made nice gains in this sector. These companies have revolutionized the way people all over the globe buy and sell goods, get their news, and build social networks. Indeed, it is hard to conceive of modern life without them. Their ubiquity in our personal and social lives is reflected in their dominant economic position, which is likely to continue for the foreseeable future. It’s tempting, for even the most disciplined investors, to invest heavily in those parts of the market that currently have the best returns. But such a narrow focus carries with it hidden dangers. The FAANG stocks are in such a dominant position because they disrupted and overturned successful business models of the past. Does anyone remember Hewlett Packard, or IBM? These companies are still around, and even making a profit for their shareholders, but they are no longer the dominant players they once were and their stock price reflects their relative decline. You can be sure that in a business incubator, or even a garage, the next disruptive technology is being conceived that will knock one or more of these dominant players off their perch. That is why, even when the best gains are to be had in a narrow segment of the market,… | Read More »
Month: October 2017
How to safeguard your accounts in light of the Equifax breach
While the Equifax credit breach has added a sense of urgency to the process, we believe it is always a good idea to practice safe on-line behavior. We offer the following tips to help you protect your accounts while still enjoying the convenience of on-line access. Be vigilant about safeguarding your information. Shred old documents containing your personal information, including credit card receipts and applications. Limit the number of credit cards you use. The more accounts you open, the more accounts you have to monitor. In most cases, it is better to pass on the extra 20% a salesclerk offers you to open an in-store credit card. Monitor your credit card accounts carefully. Often, thieves will test an account with a small purchase of less than $10. If that goes through, they move on to the expensive purchases. While major credit card companies do a pretty good job of alerting you to suspicious behavior on your account, it is still in your best interest to catch fraudulent behavior as quickly as possible, before any large scale purchases go through. Take advantage of the free annual credit report offered by Equifax, Experian and/or TransUnion. Request fraud alerts from all three of these companies as well. This will make it harder for anyone to obtain credit under your name using stolen identification. Consider a “security freeze” on your account at all three agencies. This will prevent any new lines of credit from being issued (as long as the lender checks with one of these credit-reporting agencies). Change your passwords often and make them as complex as you can (and still remember them). We suggest storing your passwords on a password protected document on your own computer. Do not store them as a Google doc, or anywhere else in the cloud. (A list of these passwords should also be kept in a safe or safety deposit box along with other important estate planning… | Read More »