Leverage Is Not Your Friend

Leverage Is Not Your Friend

Jason Zweig, the noted Wall Street Journal columnist, noted recently that between the first and second quarters of 2012, the Federal Reserve’s measure of margin loans at brokerage firms rose 9%, to $161.8 billion, the highest level in nearly four years.  The high-water mark was $386 billion in August 2008—two weeks before the collapse of…
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Economists Recommend Continuing Stimulus

The National Association for Business Economics (NABE), a large international association of applied economists, strategists, academics, and policy-makers, recently surveyed its 236 members on a number of government policy issues.  The results show that there is not much support among economists for policy tightening over the next 12 months.  In fact, the economists recommended increasing…
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Which Party Is Better For Stock Market Returns: Democrats or Republicans?

Conventional wisdom has it that Republicans are friendlier to Wall Street than Democrats.  One might assume, therefore, that when a Republican is in the White House, stock market performance would be better than during a Democratic administration.  An interesting 2003 academic research paper by Pedro Santa-Clara and Rossen Valkanov at UCLA’s Anderson School of Business…
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Is GDP Growth A Good Predictor Of Stock Market Performance?

Conventional wisdom among investors today is that emerging markets represent a potentially lucrative opportunity for equity growth as compared to developed markets.  The argument is that, because they did not participate in the excessive debt binge of the 1990s and 2000s, emerging market economies are poised to grow faster than those of developed countries like…
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Studies Show Age Affects Financial Decision Making

Cognitive impairment in old age may not simply be the result of a random event such as Alzheimer’s or a stroke. There is increasing evidence that cognitive decline in old age is natural and inevitable, and cannot be slowed by education or intelligence, nor by so-called brain exercises such as solving crossword puzzles. Our brain,…
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Is Day Trading Better Than Buy and Hold?

A recent article in the Los Angeles Times suggests that there’s a growing inclination among baby boomers to shift to day trading as a strategy to make up for all the losses they incurred since 2008.  The average 60-year-old currently has only $114,500 in his or her 401(k), according to benefits firm Aon Hewitt, and…
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