Muscular Investing

December 2018

Muscular Investing

Mark Hulbert Sentiment Indices: Advisers Are Contrary Indicators - part 4

by Brian Livingston

Advisers are just as bad at predicting the prices of gold and bonds as they are at forecasting equities, if not worse. • Whenever financial gurus are especially confident in their guesses about the market, the assets tend to move in exactly the opposite way. You may not be able to time the market using this information, but at least you can avoid wasting money on predictions. Figure 1. When advisers are most bearish on gold, the prices of gold-mining stocks tend to go up, not down — and vice versa. • Parts 1, 2, and 3 of this column appeared on Dec. 18, 20, and Read More 

Muscular Investing

Mark Hulbert Sentiment Indices: Advisers Are Contrary Indicators - part 3

by Brian Livingston

When professional advisers and newsletter editors are most bullish about the market, the Dow and the Russell 2000 go down, not up. • When they’re most bearish, large caps and small caps go up, not down. What explains the backwardness? Hulbert’s tracking confirms the essential findings of ‘behavioral finance’ — the human mind becomes overconfident and consistently guesses wrong. Figure 1. The most bearish and bullish predictions occur before rises and declines in the stock market that are exactly the opposite of what most advisers expected. Source: Hulbert Sentiment Read More 

Muscular Investing

Mark Hulbert Sentiment Indices: Advisers Are Contrary Indicators - part 2

by Brian Livingston

How does Hulbert know the weight financial advisers are recommending on the stock market and other asset classes? • He subscribes to their newsletters and websites, and then averages their percentage allocations. No, that doesn’t necessarily mean you can use their collective wisdom for market timing. When the gurus are the most bullish, the market is the most likely to fall. Figure 1. When advisers who time the stock market are recommending some of their highest allocations — a 60% to 80% investment in equities — the Dow Jones Industrial Average actually tends to go down in the Read More 

Muscular Investing

Mark Hulbert Sentiment Indices: Advisers Are Contrary Indicators

by Brian Livingston

After decades of editing the Hulbert Financial Digest, Mark Hulbert is now debunking financial advisers’ guesses. • His Hulbert Sentiment Indices show that gurus who make predictions are so often wrong that, in many cases, you can profit by doing the exact opposite of what they say. Save your money and don’t put your faith in expensive market-timing newsletters or consultants.   • My goal is to help the more than 100 million households in the US, Canada, and other countries that hold 401(k), IRA, and similar savings accounts. Using 21st-century financial Read More 

Muscular Investing

Improve a 'Bad' 529 College Savings Plan - part 4

by Brian Livingston

Some 529-type college savings plans are so restrictive that no more than two portfolio changes per year are possible. • If you’re willing to do a little extra footwork, you may be able to adapt your portfolio to market conditions a bit more often — without market timing. Here are the details you need to maximize the gain of whatever your educational investment program may be. • Parts 1, 2, and 3 of this column appeared on Dec. 6, 10, and 11, 2018. • College savings plans can be some of the most restrictive tax-free investment programs out there. In the Read More 

Muscular Investing

Improve a 'Bad' 529 College Savings Plan - part 3

by Brian Livingston

After examining the investment choices a 529 plan offers, consider fees only as the second most important factor. • Don’t get hung up on a difference of 0.1 or 0.2 percentage point between one program’s fees and another’s. Having the full set of asset classes in a broad-ranging plan can give you a larger gain than a more limited plan, thereby outweighing slightly higher fees. • Parts 1 and 2 of this column appeared on Dec. 6 and 10, 2018. In Part 2 of this column, we saw that many college savings programs — called “529 plans” in the Read More 

Muscular Investing

Improve a 'Bad' 529 College Savings Plan - part 2

by Brian Livingston

Selecting a college savings plan from the scores that are out there is daunting, even for financial professionals. • Most ‘529-type’ tax-deferred programs are very restricted in their reallocation opportunities and don’t include a full set of global asset classes. Eliminating the most limited and costly plans can help you narrow down to a managable number the ones you should consider. • Part 1 of this column appeared on Dec. 6, 2018. So far in this column, we’ve seen that most college savings programs — called “529 plans” in the US Read More 

Muscular Investing

Improve a 'Bad' 529 College Savings Plan

by Brian Livingston

There are scores of different tax-free savings programs for college — and even K–12 private-school tuition, in some areas and plans. That’s a great way to cut taxes, but most of the accounts have limited investment choices and restrictive trading opportunities. Despite these obstacles, you can pump up your long-term gains using simple techniques.   My goal is to help the more than 100 million households in the US, Canada, and other countries that hold 401(k), 529, IRA, and similar investment accounts. The vast majority of 401(k) and 529-type plans offer only Read More