In May 2015, Micheal A. Gayed published a paper called Lumber: Worth Its Weight in Gold Offense and Defense in Active Portfolio Management (free download at SSRN). We used that paper to make a profitable lumber/gold ratio trading strategy for stocks and bonds. Let’s explain the strategy’s reasoning, trading rules, backtest, performance, and results. Related…
The relationship between interest rates and stocks is crucial to understand if you are investing in the stock or bond market. How does the S&P 500 perform when interest rates are rising? Interest rates and the stock market have an inverse relationship. When interest rates rise, share prices fall, and vice versa. This is a…
What are junk bonds? The term, junk bonds, is seen in a negative way. While junk bonds are considered risky investments, they may not be as bad as the negative reputation suggests. Let’s take a look at junk bonds, their pros, and their cons. Junk bonds are bonds issued by companies that are not in…
For many, owning a business or buying expensive real estate is out of the question. An alternative to growing your net worth over time is to invest in financial instruments such as stocks and bonds. In this article, we look at the stock vs. bond investment strategy. Various investment strategies use stocks and bonds in…
Buy and hold has worked very well for long-term investors. History has also taught us that active money managers have underperformed S&P 500 or their benchmarks. We dream of becoming Warren Buffett, but most of us are below-average investors. Thus, it is best to buy some passive funds, get on with our daily lives, and…
Many investors prefer to invest using passive investment strategies and “lazy” (but smart?) portfolio management. Increased knowledge, lower costs, and a rise in fund offerings (both ETFs and mutual funds) have contributed to this. Passive strategies include a popular asset allocation strategy that extensively uses various Vanguard ETFs. In this article, we review and describe…
In recent times, most investors prefer to invest using passive investment strategies with lazy portfolio management. Passive investing has “exploded” since the financial crisis in 2008/09, and part of this is due to the enormous growth of ETFs. Passive investing allows you to spend a minimum amount of time and effort and receive a satisfactory…
