“The less prudence with which others conduct their affairs, the greater the prudence with which we should conduct our affairs.”  Warren Buffett 2017 Berkshire Hathaway Annual Report to shareholders

The current economy and markets exhibit a disturbing phenomenon: a truly stark divergence between faltering long-term economic growth fundamentals (asset valuation, economic class participation, international integration, and pillars of low debt/demographic growth/productivity), and ebullient short-term market, inflation, earnings and employment trends. Typically, when GDP growth slows or contracts, the markets anticipate that trend, usually with either a ver...

Everyone in the world who is aware of international events is living in uncertainty regarding the new American administration.  While this is always the case with new presidents, the angst and uncertainty regarding policy and direction is perhaps unparalleled since Franklin Roosevelt’s presidency.  Investors need some basis for understanding their future, and this article is an outlook based on history, social trends, and accepted economic theory that we currently embrace as a basis for investment decisions.

What do we at KWM see for at least the next four years?  While people on polar opposite sides of the political spectrum express their value ju...

Rational Versus Intelligent Investing

This article is intended to help investors understand their own rationality while drawing a distinction between intelligence and rationality. We can judge our own intelligence, but then we must also evaluate and improve our individual rationality based on the effectiveness and appropriateness of our past behaviors and decisions.

Background

An article in the Sunday 9/18/2016, New York Times, entitled “The Difference between Rationality and Intelligence” by David Hambrick and Alexander Burgoyne of the Michigan State University Psychology Department, included in its entirety at the end of this current piece, articulates...

We live in a world of institutions that have a variety of profit, altruistic, social, religious, economic, political and environmental missions.  Frequently the profit motive, the basis for most for-profit institutions, is passed up as the primary mission for an entity in favor of other non-economic purposes. Such entities are known as non-profit (NP) institutions or corporations. Yet an NP entity must still sustain itself economically both in the short and long term if it is to fulfill its embraced primary mission.  Thus cash management, business systems, promotional outreach, and investment management are key to enabling a NP entity to maintain its e...

Background

We are witnessing a truly remarkable but also unprecedented period in human history.  Our times are characterized by the greatest technology, the greatest wealth, the greatest population, the greatest achievements and the greatest systems that humans have endeavored to build and maintain.  Yet coexisting with these great accomplishments, we also witness the most systemic stresses that humanity has ever endured. First, global climate change is elevating human stress concurrently with expansion, a pervasive stress on all humanity with many effects, punctuated by local crises. Secondly, there has been human tragedy and catastrophe before, but we...

A portfolio that is actively managed will often focus on a particular asset class such as fixed income bonds, real estate assets such as Real Estate Investment Trust (REITs), equities or stocks listed on exchanges, open end mutual funds or exchange traded funds (ETFs). What is common about all these assets is that they are acquired with available cash when they represent inherent value from a perspective of future income streams.  Warren Buffett, perhaps the most consistently successful investor in history, described his view of the fundamental role of cash:

“Cash, combined with courage in a time of crisis, is priceless.”

In his interviews, he indicat...

A common debate among investors and financial professionals is the value of active versus passive portfolio management. Active management in this context means that portfolio managers either at mutual fund companies or investment advisory firms select investments for purchase by a portfolio based upon various criteria such as valuation, earnings, new products or management.  Passive management means that managers buy a relatively fixed group of investments and maintain stable proportions of these static holdings within the portfolio or fund. Both these styles require rebalancing transactions and this trading is a significant cost that is incurred by th...

The figures below are the amounts that you can contribute in both 2015 and 2016 in total for a calendar year, across all your Roth and traditional IRA's:

If you are under age 50,      $5,500; and

If you are age 50 or older,   $6,500.

Note: You can never contribute more than you've earned for the year.

The time frame for making IRA contributions for any given year is the calendar year plus January 1 through April 15  period of the subsequent year.

Further information on Federal tax deferred plans, including income limits on Roth IRA contributions, can be found at

https://401k.fidelity.com/public/content/401k/home/vpcontr...

Many people and institutions are becoming more aware of the impact that their spending and investing has on society, on policy and on the environment. Frequently social, medical and economic analysts have noticed surfacing issues that are the result of effects of personal and group behavior, often associated with consumption,  values and assumptions that combined cumulatively have adverse affects. For instance, tobacco smoking for hundreds of years was deemed to be a tolerable indulgence, but as its effects on cancer deaths and other cardiovascular disease became known, it became an issue of parental, social, corporate and governmental responsibility....

When Will Stocks Stabilize?

How deep will this correction ultimately be?  

January may prove to be the worst month for stocks in eight years. The S&P 500 just corrected for the second time in five months, and some investors think the bull market may be ending.1,2

Bull markets do end, and the current one is nearly seven years old, the third longest in history. If a bear market is truly on the horizon, it may not last very long – the 12 bear markets recorded since the end of World War II have averaged 367 days in duration.2

How far would stocks have to fall for a bear market to begin? Should the S&P close at 1,708 or below, you would have...