Archive for February, 2012

Giving Hearts

Giving Hearts

A few weeks ago, I sent out a post that contained some tax information for a few of the presidential candidates. With the release today of Rick Santorum’s tax returns, I wanted to update the table. Here is data from the four key presidential candidates’ 2010 tax returns. My focus is primarily on their charitable giving because I believe the use of one’s money reveals the heart of a person. The table is sorted from highest to lowest giving as a percentage of Adjusted Gross Income (AGI). Keep in mind that the average American gives about 3% of their income to charities. I will leave the meaning of these giving numbers to each reader.

Although I calculated each candidate’s tax liability as a percentage of AGI, I show it here more as a commentary on our current tax system. Each of these families is only doing what the tax law allows,

Are Bonds Among the Most Dangerous Assets?

This past week, Bloomberg published an article titled, “Buffett: Bonds Among Most Dangerous Assets.” This headline was one of the most misleading I have seen in quite some time. Mr. Buffett’s comments were not directed toward all bonds. If you wish to read the original article containing Mr. Buffett’s comments, click here.

There is no doubt that bonds can be risky. I recently posted a blog showing that long-term Treasury bonds, because those yields are so low, are exceptionally risky if interest rates rise.

There are many components to bond risk, including:

  • Interest rate risk – This relates to how much the price of a bond can rise or fall when all interest rates change. A key measure of this risk is “duration,” and you can read more about duration in my post, “Growing Risk in Bonds.” Basically, the farther into the future your bonds mature,

IPOs and Facebook

Over the past few weeks, my spam folder has been filling up with “special” stock offers. These emails began when the hype increased over the coming Facebook initial public offering (IPO). This is a sign that the Facebook IPO is creating excitement in the investment world. My suspicion is that the hype surrounding Facebook will turn into frenzy before the actual offering occurs. I do not have an opinion as to whether buying Facebook shares in the IPO is a good idea. However, I strongly agree with a friend and fellow investment professional who recently said to me that with IPOs if you get stock you don’t want it, and if you don’t get stock in the offering the stock will do well.

The reason the above statement tends to be true has to do with the way shares are allocated to investors who want to buy. IPO offerings

Bob Farrell’s 10 Investing Rules

In the investment world, there are so much data and opinions floating around that you can become paralyzed and not avoid make important decisions. Worse yet, all of this information can steer you toward very bad decisions. Because there is so much information floating around at any given point in time, it’s easy to justify being both bullish and bearish.

One of the ways I have dealt with this problem is to avoid listening to most people’s opinions. I take the raw data being reported and use it to come to my own decision about what, if any, actions to take in positioning my portfolio.  However, over the years I have learned that there are a few individuals who command my attention, and I listen to what they have to say. I might not agree with their opinions, but they have been right enough times about the future, and observe