1. After months of tranquility, volatility has hit the stock market. 
    A few reminders for times like this: 
    First, realize that the financial media loves drama, and the recent headlines about the market “plunging” and “diving” are overstated, to say the least. As of market close yesterday, the U.S. stock market had fallen 4.46 percent over the course of the previous week. (Today, the market is fairly flat.) BUT, the market is still up 0.68 percent since January 1, and it is up 19.14 percent for the past 12 months. Where’s the plunge? 
    Second, keep in mind that swings of 4 to 5 percent in the stock market are not abnormal. You are investing for the long-run. Even if your stocks were to lose a good chunk of their value, history has shown that stock plunges (true plunges…like the one we saw in 2008) are very often followed by solid rallies (like the one we’ve enjoyed over the past 8 years). 
    Third, turn off CNBC, don’t read the grossly exaggerated headlines, and ignore self-acclaimed “top analysts” who make wild – and most often wildly wrong – predictions. They don’t know any more than you do. They are merely clucking. 
    No one knows where the market will go. But history clearly shows that stocks have a darned good track record of rewarding investors – but only investors who don’t panic during the downturns, who hold stocks through the hard times, and who realize that after every storm comes a clearing. 

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  2. Our portfolios grew well in 2017….U.S. stocks are up about 20 percent year-to-date, global stocks are up 22.5 percent, bonds are up 3 percent….and Bitcoin, well, in the time it takes you to read this note, Bitcoin may be up or down 50 percent — who knows?! (And no, unless you have a time machine and can go back a year or two, I do not recommend investing— er, speculating — in Bitcoin.) 

    Alas, corporate profits have not kept pace with stock-market performance, and that means we are now looking at high valuations. In other words, stocks, by historical standards, are now pretty darned expensive. Numerous studies indicate that periods of high valuations (such as the P/E, which measures the price of stocks in relation to company earnings) are often followed by years of modest stock-market performance, whereas periods of low valuations generally present more fertile ground for stock growth. 

    Curious to see where stock-market valuations are at present? Click the link below…

    But this not-too-pretty picture does NOT mean you need to sell off your stocks. Studies show that NO INDICATOR — not stock valuations, nor dividend yields, nor government debt ratios, nor which team wins the Super Bowl — has more than a thimbleful of predictive power when it comes to future returns in the short-run. And although valuations have SOME predictive power when it comes to 10-year-ahead returns, that predictive power is only modest.

    In today’s politically charged, polarized world, I often hear people say that the market MUST soar, given the current presidency, Congress, etc. Nonsense. The market MUSTN’T do anything! Stocks are unpredictable (albeit not quite as unpredictable as Bitcoin). Stocks always have been unpredictable, and they always will be. That’s why we also invest in bonds and CDs and annuities and other safer assets, as depressingly low as their returns may often be. That’s why we invest in index funds, because even though stocks are unpredictable, and can be awfully volatile, they are safer purchased in large numbers, rather than picking one or a handful of individual stocks. (While the broad market has been soaring, shares of IBM — not long ago the bluest of blue-chip stocks — LOST 8.5 percent in the past year.)

    That being said, taxes — now with a new tax bill having been written into law — are predictable. And taxes will be changing fast. See your tax adviser for details, but in general, you would be wise to spend the next few days taking any deductions that might be available to you this year, but perhaps not next…. Any tax bills you can pay in advance of 2018 should be paid. That might include your property taxes and your state and local income taxes…. Make whatever charitable giving you can now…. If you haven’t already, max out on your employer 401k plan. (You have until April 15 to contribute to an IRA, and have it still be deductible for 2017.) Any medical costs that can addressed prior to December 31 are best paid.

    In the last week, I’ve paid my property tax for 2018, and my Pennsylvania and Philadelphia quarterly taxes, even though they aren’t due until January 15. And I’ve checked to make sure that my portfolio — as well as the portfolios of clients with assets under management — are in balance. The nice market rise over the past few months may have created some lopsidedness in your nest egg.

    I am boarding a plane for the Netherlands on MondayAfter also visiting Belgium and Norway (hope to see the northern lights!), will be returning to the office on January 10. 

    I wish you all a very happy holidays!



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  3. Thirty years ago, in October of 1987, the Minnesota Twins beat the Detroit Tigers to win the American League pennant, Costa Rican President Oscar Arias won the Nobel Peace Prize, and the Dow Jones stock index suddenly fell 508.32 points or 22 percent – the largest single-day loss in history.

    This week, pundits on television, in newspapers and on the Internet are silent as to whether the Minnesota Twins will beat the Detroit Tigers, and not a single pundit has suggested that Oscar Arias (still alive and well) will win another award. But turn to the financial news, and you will find story after story giving great significance to the Crash of October 19, 1987 (Black Tuesday), with headlines such as, “Will it happen again?” and “Hold onto your seats, investors!”

    Of course, we all know that the future is unpredictable, and the goings on in the stock market 30 years ago are no more relevant to or predictive of the stock market today than yesterday’s baseball wins and Nobel Prizes are relevant to or predictive of baseball scores or prize winnings in the modern era. But the financial media needs you to read, watch or click, and to get you to do those things, they need drama. Hence, the headlines.

    Will it happen again? Will the stock market tumble? The answer is Yes. For sure. That’s simply the nature of markets. But we don’t know – just as no one prior to October 19, 1987 knew – whether that fall will occur tomorrow, next year, or in 8 years.

    But, you say, we are living in nefarious times, within a troubled world. And I can’t argue with that. But the stock market is tied (loosely in the short-run, tightly in the long-run) to corporate profits, and corporations sometimes do best in troubled times. To provide a few stark examples, consider how the defense industry fares in times of war, how dollar stores thrive during a recession, and how the gun manufacturers’ profits and share prices tend to head up, rather than down, every time there is another mass killing. (This is not to say that corporations only profit from misery! There are many corporations out there doing good for the world….I am only using these examples to point out that social problems do not necessarily equate to stock-market problems.)

    Moral of story:  Tighten your stock allocation perhaps a few percentage points, but do not bail out of stocks. The alternatives are bonds and cash, and neither of those offers much chance of high return.

    And speaking of bonds…. The financial media has also been creating some small panic over bonds, as well… Yes, interest rates are currently very low. Yes, sooner or later, interest rates will go up. Yes, rising interest rates can hurt your existing bonds (paying what are now no longer competitive rates). But before you sell your bonds, remember that you’ve been hearing this story now for about nine years….In Japan, they’ve been hearing it since 1990! If you had cashed out on your bonds 6…7….8 years ago, you would’ve missed out on a lot of healthy interest payments. Keep in mind that even when interest rates do rise, your bond portfolio may temporarily sag, but chances are that it will regain its full value before too long. That’s the nature of bond markets.

    One myth I’ve come across is that individual bonds, chosen over bond funds, will allow you to side-step interest-rate risk. That sounds good, but it simply is not true. Yes, you can buy an individual bond (pay perhaps a chunky commission in doing so), hold it till maturity, and it will be immune from interest-rate risk. You WILL get your full principal back in full (assuming the issuer remains solvent), in 10…20 (or however many) years. But let’s assume that last year you bought a bond for $1,000 that pays 4 percent over 20 years. And now, interest rates on similar bonds pop to 5 percent. If you wish to sell your bond, well, you are not going to get $1,000 for your low-paying bond any more. So you, goshdarnit, are going to hold that bond for another 19 years, rather than sell it at a loss.

    Well, that’s your option. But know that for the next 19 years, you’ll be collecting 4 percent a year, while all of your friends and neighbors who bought new bonds are getting 5 percent. Sure, you’ll get back your $1,000 in 19 years, but you are very definitely taking a loss in the form of locking in your principal for so many years at a lower rate. And that loss can be significant. Content yourself, unless you have a very large portfolio and are willing to spend considerable time buying and selling individual bonds, to low-cost indexed bond funds. And trust that interest rate rises are nothing to lose sleep over…Bond funds will initially lose value, but then gain value as higher interest rates kick in for greater return.

    Moral of story:  A well-balanced portfolio of stocks and bonds is the ticket to saving the wealth you have, and building more over time. Make sure that after the recent stock-market run-up (especially in U.S. stocks) that your portfolio is in balance, and not overly aggressive. If you haven’t rebalanced the portfolio in some time, you will likely find it stock-heavy. Time to take some of those profits off the table, and buy more bonds…  If you feel comfortable rebalancing yourself, do it. If I have your assets under management, I’ll do it for you. If you manage your portfolio on your own, and you do not feel comfortable rebalancing, or you feel that your overall portfolio allocation may be too aggressive or not aggressive enough, I can certainly help you to determine that.

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  4. Pop Quiz:

    A typical company stock, if you tally up its gains over its entire lifetime, can be expected to earn what rate of return?

    A)    10 percent
    B)    About the same as one-month Treasury bills
    C)    0 percent
    D)    15 percent
    E)    The rate of inflation + 10 percent

    The answer, coming out of a recent study at Arizona State University, is …. B….about the same as one-month Treasury bills, or, to put that another way, they earn squat.

    “In terms of lifetime dollar wealth creation…96 percent [of stocks] collectively matched one-month Treasury bills,” writes Professor Hendrik Bessembinder, the study’s author. So why do we invest in stocks, with all their inherent risks? Well, it’s because of the other stocks, the few and proud…”The entire net gain in the U.S. stock market since 1926 is attributable to the best-performing four percent of listed stocks,” according to the study entitled “Do Stocks Outperform Treasury Bills?”

    The moral of the story is that smart investors invest broadly. They own hundreds of stocks. Because trying to pick winners, when the odds are 24:1 against you, is really a fool’s mission. Yet so many investors try. I wish them luck. They’ll need it.

    Of course, as much as we investment professionals hate to admit it, luck also plays a role (albeit a smaller one) in the returns that investors with low-cost, well-diversified portfolios may enjoy. But with such a portfolio, your expectations of positive, and substantial long-term return are very realistic, luck playing only a minor role.

    But, you may ask, does that same expectation of positive and substantial returns hold true today? After all, there seems to be an inordinate amount of craziness going on at the moment, much of it due to a new government, which, to say the least, is bending the fabric of our society in ways that are making many Americans, including me, concerned.

    Will the craziness kill the stock market? I don’t know. No one knows. But I want to dispel you of any notion that societal challenges and hardships, no matter how ugly, necessarily kill stocks. Remember, for example, the early 1940s, when Hitler’s troops were storming through Europe, and Japanese soldiers were raping Nanking, and the fate of the world was very much in question. U.S. stock market returns? 1942…20.3 percent. 1943…25.9 percent. 1944….(okay, the tide was starting to turn)…19.7 percent.
    Remember the Cuban Missile Crisis in late 1962, when you may have been in school crouched under your desk, and the world seemed on the brink of destruction? The market turned a bit cold that year with a return of -8.7 percent, but then came back steaming hot in 1963 with a return of 22.8 percent, despite the assassination of a very popular president, race riots, and an escalation of the cold war, including American troop buildup in Vietnam.

    This is not to say, of course, that the stock market isn’t vulnerable to any of today’s large challenges, but those who say it “must” go down are just blowing smoke. It “mustn’t” do anything. History doesn’t work that way. But all the same, now is a great time to make certain that your portfolio is in balance, and that your exposure to stocks is something you can handle. Those stocks should always be diversified over many stocks and many industries and should hold as many, or almost as many non-U.S. stocks as U.S. stocks. And bonds, even though they are paying very low interest rates, most definitely belong in your portfolio.

    But back to matters non-U.S…. My daughter Addie just turned 21, and finished her junior year of college, and I’m taking her on her very first trip to Europe. I was also 21 when I went to Europe for the first time. Addie and I, as chance would have it, are flying Icelandic Air, and passing through Reykjavik on our way to the Netherlands, Belgium, and (perhaps) Luxembourg….Just as I did when I was her age. (Alas, the Icelandic Air flight no longer costs $99!)

    We leave tomorrow (Tuesday the 30th), and I will be checking email only intermittently while in the Old World, and will get back to you if anything is truly urgent. Otherwise, I will do so upon my return to the office on June 13.

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  5. It has been a tumultuous time for both the nation and the markets, and rising up through the smoke, come the inevitable pundits of the financial press, crystal balls in hand. “Best Sectors under Trump!”... “Six Surefire Ways to Profit from a Trump Presidency”...”Time to Sell!”...”Time to Buy!”...


    While such headlines may suck you in, they and the stories below them are meaningless.

    Didn’t the “expert” soothsayers fall flat on their faces in calling the election? Didn’t they once again collectively say the market would crash on the day after the election, but it didn’t?

    Jason Zweig of the Wall Street Journal, one of the good guys of the financial press, pointed out this week that “The best way to make the gods of financial history laugh is to say that anything is ‘clearly’ going to happen.” And this is especially true, he says, where presidential elections are concerned.

    Zweig explains:

    President Barack Obama “clearly” was going to impose health-care regulations, and so he did—but healthcare stocks ended up resoundingly outperforming the rest of the stock market while he was in office. President George W. Bush was “clearly” going to increase military spending, and so he did – but...defense stocks lost 19 percent in 2001 and nearly 7% in 2002....President Franklin D. Roosevelt was “clearly” going to be bad for Wall Street. The day after the 1932 election, the Dow Jones Industrial Average sank 6.7 percent during trading hours and closed down 4.5 percent. But then, between February and August 1933, the average stock rose 186 percent.

    What’s this all mean for a Trump presidency?

    It means that nothing is certain. Why are stocks up in the short time since the election? Princeton professor Alan Blinder, former vice chairman of the Federal Reserve, explains in a Wall Street Journal editorial that the current stock market cheer is likely due to Trump’s promises to increase government spending on infrastructure. “[This would] put the economy on a sugar high,” Blinder writes. But there is, he says, enormous uncertainty as to whether this spending will happen. After all, the President-Elect has run only the vaguest of campaigns, has no track record in government, and has yet to build his circle of economic advisors. He faces not only hostile Democrats, but many hostile Republicans, as well. In fact, many of the new and re-elected Republican members of Congress came into office on platforms promising to reduce the federal debt.  Trump’s plan to increase spending on infrastructure (while lowering taxes) would result in a deepening of U.S. debt.

    Bottom line for we investors: We really don’t know what will happen to interest rates, the value of the dollar, the cost of oil, and least of all, the stock markets. The only thing that is “certain” is that the markets, always a crap-shoot in the short run, will continue to be a crap-shoot in the short-run. In the long-run, however, the stock markets, despite their sometimes violent surges and cascades, should continue to provide nice rewards, as they have done through the many, many challenges of the past century. (Think Russian Revolution, Flu pandemic, WWI, the Great Depression, Hitler and Mussolini, the Cold War, Vietnam, Race Riots, September 11, 2001, the Financial Crisis of 2007 - 2008, and Brexit.)

    The best you can do:  Make sure that you have found your “Risk-Return Sweetspot,” and have invested accordingly. Keep your costs low. Stay well diversified. Rebalance regularly. And pay no attention to any “expert” who says that he can view the future.


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  6. Since the market seesaw following Brexit, things have been surprisingly calm given the uncertainty associated with the upcoming elections. A few things to bear in mind:

    1.        You will hear many claims, as you do during every election, that one party is better for the stock market than the other. The truth, the absolute truth: The stock market has done better under Democratic administrations than Republican administrations, but the advantage is very slight.

    2.        This election, the election of 2016, is different from most. I won’t whitewash that fact. One of the candidates for president is especially unpredictable. Remember that although presidents have great power, that power is still limited, and their term is only four years.

    3.        The big players on Wall Street know very well that there’s an election coming. Stock prices likely already reflect the possibility of some post-election craziness. That being the case, all we can know for certain is that the markets will fluctuate, both before the elections and after.

    4.        Even if the economy sputters due to less-than-optimal leadership, the economy and the stock market have a strange way of sometimes moving in opposite directions. Consider that over past years, headlines that read “Unemployment on the Rise” have often gone side-by-side with headlines that read, “Dow Up.” The unpredictability of the stock market, even in decades of big change, is apparent throughout world history. We’ve seen markets fall in what seem like robust times, and we’ve seen markets rise in troubled times.

    5.        Trading out of stocks is often costly...there are commissions, there are “spreads” (middle-man cuts), and there may be tax ramifications. But trading out of stocks is still much easier than trading back into stocks... You may find that any political uncertainty that comes in November may drag on for months...And if your money is in cash, earning today’s pitifully low interest rates, you will be losing steadily to inflation. I’ve seen people wait years for the market to “stabilize.” If you want stability, put your money in bonds or CDs. 

    What then are we to do between now and November? I would suggest, if you are frightened of heightened volatility that could come with the election, you might hold off on buying any stocks over the next six weeks. In the long-run, six weeks won’t make or break you. But should you sell what stocks you have now? As long as your portfolio is well balanced (as it should be), and the money you have in stocks is not likely to be needed for many years to come, you can sit tight. As Warren Buffett says, “Investing is simple, but not easy.”


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  7.  {written 6/26/16}

    The vote was on Thursday, but the final tally didn’t come in until early Friday morning. The world watched in anticipation as voters in the United Kingdom decided whether they would remain part of the European Union.

    Had they voted to stay, investors would have heaved a huge, collective sigh of relief, and the stock market might have soared. But as it turned out, a slight majority of voters  -- 51.9 percent – shocked the pollsters and opted to leave. Prime Minister David Cameron resigned, the British Pound took a dive, and the FTSE 100 (the British equivalent to our S&P 500) tumbled.

    Nearly all other nations’ stock markets followed suit. By the end of the day, U.S. stocks had fallen by about 3.5 percent, and foreign stocks, by about 7.7 percent. On the other hand, the U.S. bond market rose 0.55 percent. If your portfolio was in half bonds and half stocks, with the stocks evenly split between U.S. and foreign, your bottom line fell Friday by about 2.5 percent.

    What happens now? No one knows.

    At times like this, the only smart thing to do is to look toward the horizon. You are investing for the long haul. Remember that your losses from Friday are only paper losses. The markets will recover – although I can’t promise that they won’t decline further before that happens.... Some of the fears that drove the market on Friday are not irrational. The U.K.’s decision may well disrupt trade in Europe and beyond. It is possible that other E.U. nations may follow suit. But I see no reason that corporations worldwide won’t eventually adjust to the new reality.

    A turnaround could happen in the next several hours. Or it could be many months away. But when the markets do turn, they are likely to turn quickly. And unpredictably.

    U.S. stocks may bounce back rapidly as investors take note that only 3 percent of our trade is with Britain, and that not one of our four largest trading partners is in Europe. Foreign stocks may bounce back speedily as investors realize that nothing about “Brexit” warrants a permanent 7.7 percent markdown in the value of Europe’s many strong corporations. Trying to time the market, or trying to choose either U.S. or foreign stocks is tempting, but unwise.

    Better to stay diversified. Stay balanced. Stay focused on the long-run. And as the Brits themselves are known for saying...Keep calm and carry on.

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  8. When I think of the stock market, especially in down times like this, I try to picture a big rubber band. A law of physics (not sure which law, but some law!) tells us that the more the rubber band is pulled back, the faster and further it will fly when released.   

    So it is when the market pulls back, as it has in the past few weeks. Going by history, we have more reason, not less, to be optimistic about the market’s future returns. 

    Remember 2008? It was a brutal year (S&P 500 down -37 percent). But the very next year, 2009, the market snapped back (S&P 500 up 26.5 percent), and continued to climb.... For every dollar you had invested in the S&P on January 1, 2009, you would have had $2.60 by December 31, 2014. 

    In 2015, this past year, the index hardly moved at all.  

    In the past 21 days of 2016, we’ve seen a fall in the index of about 8 percent. Small caps and foreign stocks (which, together with the large U.S. stocks of the S&P, form a well-diversified portfolio) have generally moved in the same direction as the S&P, only with greater swings. 
    I urge you, as I did in late 2008, not to panic and sell. If you’ve taken my advice in the past, you have plenty of money outside of the market, so that if you need to withdraw cash, you shouldn’t have to sell stocks. Not now...not for months, or even years to come.  

    In fact, as difficult (even nauseating) as it may be, now may be a good time to buy. Don’t try to time the market -- just keep your portfolio in good balance. If we designed a portfolio for you that was 60/40 (60 percent stock/40 percent bonds), then the recent slide in stocks may mean that your portfolio is looking more like a 55/45 portfolio. To get it back to where it was, to “rebalance,” means selling bonds and (gulp) buying stock. 

    I generally recommend doing this no more frequently than once or twice a year, largely to avoid unnecessary taxes and (often hidden) costs to buy and sell. But if your portfolio is too out of whack, it might make sense to rebalance sooner. There’s no strict law about when to rebalance. This is finance, after all, not physics. If you’re unsure whether to rebalance, let’s get in touch. If I have your assets under management, I will be checking your balances in the coming weeks, and contacting you if your allocations are too far from target.  

    Oh....If you are disheartened that your foreign stocks have lately fallen harder than your U.S. stocks, and you are thinking about abandoning foreign stocks, PLEASE read the attached article from Vanguard, which argues very convincingly that now may be exactly the wrong time for “home-country bias.” Note especially the chart that shows how U.S. and foreign stocks have flip-flopped over the years, with yesterday’s losers becoming the champions of tomorrow.  
    In the publishing world, I want to remind you all that the newly updated “portable editions” of Investing in Bonds for Dummies and Investing in ETFs for Dummies are available wherever books are sold. “Portable” means that they have been condensed from the earlier Dummies editions, from roughly 350 pages to 250 pages, and the book dimensions got smaller, too....Easy reading!

    And if you are going to the bookstore anyway, I highly recommend The Devil’s Financial Dictionary, a new book by Jason Zweig of the Wall Street Journal. It’s very funny, and yet also provides a scarily accurate look at the world of investing.  

    Here is the Devil’s definition of the word correction, which seems especially pertinent to the current market: 

    Correction, n. A moderate decline in the market that the people who think they have recognized it believe will not last much longer. It could, however, turn out to be the beginning of a full-blown bear market, nothing but a dip, or the beginning of a bull market. Only after it is over will anyone know for certain what it was.  

    Exactly, Beelzebub.  

    In the next few months, we’ll see where this “correction” goes.  

    In the meantime, keep your focus on the long run, and turn off CNBC!

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  9. My Letter to the Editor, published in The Wall Street Journal, August 22-23, 2015

    Your editorial “Obama Targets Financial Advisers” (Aug 17), argues against Labor Secretary Tom Perez’s proposal to require brokers to meet a fiduciary standard – to put their clients’ interests ahead of their own – claiming it would hurt middle-income people, raising their investment costs and limiting choices. In other words, you contend that the commissioned products being sold today are the middle-income investors’ best options.
    But if that were true, if these products are the best that middle-income investors can hope for, then the brokers selling them would indeed already be holding to a high fiduciary standard, and Perez’s proposed ruling wouldn’t change a thing.
    Granted, if brokers had to work with products that didn’t earn them a commission, they would have to earn their money elsewhere, and would likely wind up charging the client directly. A typical front-load (commission) of 5.75 percent costs a client with a $25,000 portfolio a cool $1,437.50. Many – if not most – fee-only advisers I know would be happy to construct a $25,000 portfolio for that amount or less....And the client would be guided toward, in most cases, a far superior investment mix that would cost way less, and perform way better in the long-run.

    Russell Wild, M.B.A.
    Global Portfolios

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  10. The world stock markets have taken a punch in the past several days, down roughly 5 percent from a week ago.

    Reading the financial press and watching CNBC, you’d think this is the end of the world.

    It could be; but it probably is not.

    Stocks go up. And they go down. And then they go up again (about two out of every three years). This has been a pattern since stocks were first publicly and commonly traded about 200 years ago.

    The past six years have been very unusual. Since the big downturn of 2008, the markets have seen a relatively calm upward climb.... Had you invested $100 in the world stock market on March 1, 2009, and had you stayed invested until about a month ago, your investment would’ve been worth about $270.

    In the past several days, following what Bloomberg and the Wall Street Journal are calling a “global selloff” (accompanied by pictures of traders holding hands to their faces, looking aghast, as if loved ones are falling off a cliff) your 2009 $100 investment would now be worth “only” $256.

    What’s going to happen next? Here is what:  Some investors (prey to the frantic newscasters) will panic and sell their stocks, only to reinvest when prices go back up. This strategy is called selling low and buying high. It doesn’t work well, even ignoring trading costs and unnecessary tax hits.

    Others, a minority of small investors, will not sell. In fact, if prices dip more, and they rebalance their portfolios, they’ll see that it is time to buy more stock. This strategy is called buying low and selling high. It works. Historically, it has worked very, very well.

    On a similar note, the relatively calm climb upward in the value of world stocks has been due largely to the super performance of U.S. stocks....Foreign stocks have lagged. That’s especially true of European stocks, troubled by the severe financial problems of Greece. And it is true of emerging-market nations’ stocks, hurt by the recent tumble in commodity prices (gold, silver, oil...). For U.S. investors, currency flux in favor of the dollar has accentuated the lag in foreign-market performance.

    But just as you shouldn’t assume that because stocks have fallen in the past few days they are a bad investment, you shouldn’t conclude that the outperformance of U.S. stocks is going to continue forever. It won’t. At some point, foreign stocks will outperform US stocks....That flip-flop between U.S. and foreign outperformance is another ongoing pattern that will likely continue forever... If currency flux (which is as unpredictable as the stock market) works in the opposite direction as of late, and the dollar starts to drop vis-à-vis the Euro and Pound, US investors will see the foreign-stock side of their portfolios significantly outpace the domestic side.

    In conclusion, stay focused on the long term, keep your portfolio balanced (I can help if you need help there), and breathe deeply on days like this one.

    It would help, too, to turn off CNBC....

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