Skip to main content
Home Working together to build your tomorrow

'Snap-back effect' always follows crash

It's always reassuring to experience the "snap-back effect" that takes hold after a downdraft in the stock market. At times, it can be so exhilarating and unexpected that I sometimes find myself looking forward to a short-term crash just to enjoy what I know will be the inevitable, subsequent blastoff. It's like being at Cape Canaveral.

So, looking at some numbers generated since the Oct. 3 low point, I noticed that some of my favorite fund types gained as much as 10 to 20 percent in just a 10-day period. Whew.

Pine trees encroach on solar potential

Sunset magazine did a really bad thing 50 years ago when it began a campaign to encourage Californians to plant Monterey pine trees everywhere. Those trees were easy to grow and created a lot of shade.

The oldest of them, however, are now beyond their lifespan and are falling over or dropping limbs on people. They also shade roofs that could otherwise be productively covered with solar panels. As I write, a tree service is currently clear-cutting the pine trees that encircle my house.

Occupy Wall Street protest might inspire others to take action

"It was the best of times. It was the worst of times."

The opening lines of Charles Dickens' "Tale of Two Cities" comes to mind as I read about the exploits of Occupy Wall Street -- a growing grass-roots protest of mostly young people frustrated by the shift of power from elected representatives (where it belongs) to Wall Street.

Those of us wondering for the past three years when the torches and pitchforks would be coming out may be seeing it, finally.

A lot of money is sitting on sidelines

The big news for August is that mutual fund investors moved about $50 billion out of stock funds and added about $10 billion to bond funds. Presumably, the $40 billion difference wound up being added to the $9 trillion hoard of cash sitting on the sidelines.

What makes the cash phenomenon more stunning is the historically unprecedented large amount combined with the fact that it is earning zero. In fact, with about 2 percent inflation currently, that money is going backward. Mutual fund investors? What do they know?

Avoid coming gold bubble

If you don't have any gold in your investment portfolio, are you missing the next big thing? With gold hitting an all-time high recently of $1,917 an ounce, I was prompted to pick up my dog-eared copy of Peter Bernstein's 2000 book, "The Power of Gold." Reading a little history on a possible bubble clears the mind of any irrational exuberance.

Gold's recent price, adjusted for inflation, is still less than its 1980 peak of $850. Actually, at today's inflation-adjusted dollar, the price would have to reach $2,300 to equal the previous high.

Don't let market's volatility spook you

Holy cow. It looks like the stock market is going to hell in a hand basket -- again. Fortunately, this is an opportunity for most of us and a problem only for those with a short memory.

First, we have to keep front and center the reality that there is, periodically, a disconnect between the value of stocks and the companies that they represent. For example, with the S&P 500 index off by 17 percent since its high four weeks ago, do we all think for one minute that the actual appraised value of our largest 500 companies suddenly dropped by that much in just a month?

Hard workers deserve safety net

Filling in as a volunteer bartender at my yacht club once every few months has reminded me of what it's like to have a real job away from the comfort of a desk.

A five-hour shift behind a busy bar is a nonstop exercise of mixing drinks, filling pitchers with beer, trying to make a martini, and shoving dishes through the dishwasher. Then there's the computerized cash register, with a mind of its own, offering yet another source of anxiety.

About four hours into this experience, one starts watching the clock.

Create your own fund to track Dow

Is there any such thing as the perfect mutual fund? Or are we all running around like Indiana Jones trying to find the lost Ark of the Covenant?

The perfect "Set It and Forget It" fund would have to be one that rises with the rest of the market, cranks out annual income, protects reasonably well against the downside during a market crash, and charges next to nothing in management fees.

Subscribe to