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FEATURE ARTICLE ARCHIVES

Inflation (or lack thereof)
March 01, 2010
Fear of inflation has remained strong since our last bout of high inflation three decades ago. The fact that inflation has steadily gone down during most of this period hasn’t put fears of the Great Inflation Monster back into the... READ MORE
Buy High, Sell Low, Pro Edition
February 04, 2010
January was the first real down month since the market recovery began on March 9, 2009. In January, an investment in the Vanguard 500 Index Fund (VFINX), which owns the stocks in the S&P 500 and includes dividends along with... READ MORE
2009 – A Tale of Two Markets
January 05, 2010
For stocks, 2009 was the best of times and the worst of times. It was the end of an Age of Foolishness, but unlikely the dawn of an Age of Wisdom. Rarely will you see such gut-wrenching losses and widespread... READ MORE
The Bigger They Are, the Harder They Fall
December 03, 2009
It's difficult to determine when investor optimism becomes irrationally exuberant . Although bubbles appear obvious in hindsight, when you're in the midst of one, everything feels quite rational. Whether speculating in Florida real estate, Internet stocks, gold, or even tulip... READ MORE
Missing the Last Hurrah: Our Recipe for Success
November 04, 2009
Mutual fund flows (investor money moving in and out of mutual funds) are one of our core indicators. We use them to decide how much to allocate our Powerfund Portfolios into stocks, bonds, and specific sectors. Of course, other indications... READ MORE
Zero — The New Black
October 01, 2009
Recently, fund investors have abandoned money market funds and similar near-zero interest investments, like short-term government bonds, in search of higher returns. Of course, being overly cautious is usually a bad idea. But trying to capitalize on irrationally high returns... READ MORE
Broad View
September 03, 2009
If we define the five broad asset classes as follows: 1) Stocks 2) Bonds 3) Cash (Money market funds, T-bills, Shorter-term CDs, etc.) 4) Real Estate 5) Hard Assets (Commodities, Antiques, collectibles, Art, etc.) Stocks should be the best performers... READ MORE
At Some Point
August 03, 2009
The market keeps charging ahead in spite of widespread criticism of government goings-on. Nothing seems capable of stopping the upward move -- not rising unemployment, not growing deficits, not higher oil prices, not lingering global flu fears, not even the... READ MORE
Trade Talk
July 03, 2009
One line in today's Wall Street Journal summarizes why we just cut back (a bit) on stocks in most of our model portfolios: "Mutual funds saw net inflows for the 15th consecutive week...bringing the total inflows for the past 15... READ MORE
But What about the Fund Consumer?
June 02, 2009
There's been a lot of talk about American consumers and what they'll do with their money once the dust settles. Most market analysts, economists, and prognosticators are quite certain that American consumers have fallen and simply can’t get back up.... READ MORE
Unpopular Wisdom
May 03, 2009
The recent market rally continues, but the faster stocks climb, the more our skepticism grows – not that we didn’t want stocks to rise following our trade at the end of February. If this momentum continues, we plan to cut... READ MORE
April Fool's Day
April 01, 2009
They say it’s always darkest before the dawn. But then again, it’s pretty dark at 1:00 AM, too, and you still have a ways to go before the sun comes up. Let's consider a few basic financial factoids currently circulating:... READ MORE
I’ve Fallen…And I Can’t Get Up
March 04, 2009
As of Monday March 2nd the S&P 500 is already down about 22%, including dividends, in 2009 – more than half of 2008’s loss of 37%. The market is now down over 50% from the peak in late 2007. We... READ MORE
What went wrong in the world, and in our world
February 02, 2009
2008 was a historic year for fund investors. Until 2008, most bad markets still enjoyed a few rays of sunshine in the form of one or two categories that went up or perhaps fell only slightly. 2008 changed things. In... READ MORE
All You Wanted To Know About Investing In The New Year But Were Afraid To Ask
January 06, 2009
The New Year is traditionally the time of New Year’s Resolutions, “I will eat less and exercise more” or “I will quit smoking”. New Year’s offers everyone a time to reflect on past behaviors and decisions and commit to resolutions... READ MORE
Black Friday Stock Market Sale — 70% Off
December 02, 2008
With all the hoopla surrounding the bountiful bargains awaiting consumers at a time when retailers are dropping like …well, like stocks…let’s check up on one of our favorite stock bargain-o-meters: the correlation between GDP and stock market capitalization. Mutual fund... READ MORE
October (Not So) Surprise
November 04, 2008
Why do markets always seem to crash in the month of October? Did you know that nine of the 20 greatest one-day percentage losses on the Dow Jones Industrial Average took place in October? Of course, last month accounted for... READ MORE
Surf’s Up
October 01, 2008
The waves of panic and euphoria are rolling in bigger and faster these days. In the last issue we noted we’d likely need to see “a 500 point one-day Dow drop on some big bank or other company failure” to... READ MORE
Big Gainers
September 03, 2008
A couple of weeks ago an article on TheStreet.com about top-performing ETFs noted, “In July, the best-performing exchange-traded funds bet either against commodities, or on biotechnology stocks.” The piece went on to note the just over 20% one-month returns of... READ MORE
Rough Seas
August 01, 2008
After a volatile month, let’s check up on the casino stock market. After several years of smooth sailing on Wall Street, rough seas have made a comeback. Lately it seems like the Dow only moves up or down several hundred... READ MORE
Time To Buy! But What? And Why?
July 02, 2008
In our commentary last month we noted how, over the last year, fund investors have been getting out of stock funds after the market slipped, then buying in after the market rose – the classic buy high/sell low cycle. A... READ MORE
Checking Up on the Buy-High, Sell-Low Crowd
June 03, 2008
Fund investors have a bad habit of buying high and selling low. They do so with specific funds, categories of funds, and the stock market in general. This behavior is one of the top reasons why, as studies have shown,... READ MORE
Peak Oil…or Peak Speculation?
May 01, 2008
The most surprising feature of the current housing crisis and economic slowdown is the recent rise in commodity prices (the notable exception being gold, which is down about 13% from its March highs). Oil just gushed to $120 a barrel,... READ MORE
The Elusive Bottom and Limits of Diversification
April 02, 2008
The relatively low volatility stock market of the last few years seems a thing of the past. Today we see wild moves almost daily as the market swings from euphoria to panic. On the one hand, the probability of a... READ MORE
Yield Overreach
March 03, 2008
Over the last year, the strategy that has hurt investors (mostly large institutional ones) the most has been, for lack of a better term, the "yield reach." We'll define this strategy as buying a riskier income-oriented investment in order to... READ MORE
Double Bubble Trouble
February 02, 2008
January was certainly exciting. Investors finally removed their rose-colored glasses and collectively decided that the economy really is slowing and the housing market problems may be impacting several sectors, not just housing. In response, the S&P 500 fell just over... READ MORE
Happy New Year!
January 03, 2008
Happy New Year! Frankly, we’re a bit early. The Chinese New Year doesn't arrive until February 18th, and considering that the Chinese stock market doubled in 2007, while our own volatile yet underwhelming market has taken more than ten years... READ MORE
Taxing Times
December 03, 2007
December is tax season for mutual funds. Without getting into a review of IRS regulations, mutual funds are companies but are not like GE or McDonald’s. Funds aren’t taxed as long as they distribute to shareholders essentially all taxable profits... READ MORE
Conundrums Lead to Investment Opportunity
November 01, 2007
In Alan Greenspan’s most famous market commentary, he merely hinted at the possibility of irrational investor exuberance. The ensuing far more irrationally exuberant behavior in the stock market was surprisingly ignored by Greenspan, at least publically. His second most famous... READ MORE
Buddy, Can You Spare a 10 Cent Euro Coin?
October 01, 2007
In the great debate about the stock market’s uncertain future, a case can be made either for or against continued up moves. Many factors, including valuations, sentiment, momentum, earnings growth, economic growth, dividend yields, and interest rates are all routinely... READ MORE
Rings of Fear
September 03, 2007
August certainly didn’t seem like a month that would end better than it began. The S&P 500 was up just over 1% - not exactly a barnburner, but given the turmoil in July and early August, nothing short of a... READ MORE
Buying Opportunity?
August 01, 2007
July started with a boom and ended with a bust. Since its peak in mid-July, the broad market is down just over 6%. The recent weakness has wiped out the early strength in July – the broad market is down... READ MORE
Trades!
July 02, 2007
You probably already know that we did a bit of trading at the end of June. The giant red trade alerts on every model portfolio page (and our recent email alerts) were probably a dead giveaway. In fact, that set... READ MORE
What Does the GDP Announcement Mean for Powerfund Investors?
June 02, 2007
We use several strategies to add value to your portfolio. We select high-quality funds in areas that are currently out of favor, we increase stock allocations when stocks fall out of favor, and we cut back on stocks when they... READ MORE
Dow 13,000!
May 02, 2007
While it’s not quite the bubble-era Promised Land of “Dow 36,000,” the recent Dow 13,000 milestone is quite exciting, nonetheless. Any day now, it looks as though the S&P 500 (a better market benchmark that more closely mimics how most... READ MORE
The American Dream
April 01, 2007
Last year, we wrote on MAXfunds.com, “Now that home price appreciation is leveling off, the ugly side from the growth of no-and low-money-down lending should rear its head.” The main concern in the stock market today is just how far... READ MORE
Market Mini-Crash – The Takeaway
March 02, 2007
Ouch. It has been quite some time since the Dow dropped over 500 points in just a few hours. The last time it happened, the biggest terrorist attack in our nation’s history was the culprit. This time, we had only... READ MORE
Miller Time
February 04, 2007
One of the big stories in mutual funds last year was the end to the infamous Bill Miller’s streak. In 2006 Legg Mason Value Trust (LMVTX) – the flagship fund managed by Miller – scored an unimpressive 5.9% return, missing... READ MORE
New fund launches: too much of a good thing
January 02, 2007
We’re always looking for signs of overly exuberant fund investors to guide our investing decisions. When fund investors get very excited about a specific fund, a category of fund, or even investing in general, it often pays to do the... READ MORE
Year End Fund Trading
December 01, 2006
The end of the year is a tough time for fund investors. December is when most fund companies make large taxable distributions. December is particularly punishing after a few good years of stock market returns, which can lead to gains... READ MORE
The Glass Ceiling
November 02, 2006
With the Dow breaking its all-time record, now is a good time for an investment sanity check. While specific areas of the market can march to their own drums for years, broadly speaking, stocks have some natural boundaries for potential... READ MORE
Beware (investing) Truths that are self-evident
October 03, 2006
Somebody bust out the champagne. The Dow just broke its all time closing high of 11,722 (hit on January 14th, 2000). If you factor in dividends, anybody who bought the leading Dow index fund (Dow Diamonds exchange-traded fund – ticker... READ MORE
Funds, Bonds, Feds, Meds
September 04, 2006
Fund investors – off the mark again According to the Investment Company Institute, fund investors pulled about $8.4 billion out of stock funds in June. As is often the case after fund investors bail on stock funds, stocks moved back... READ MORE
Will the big bad Fed blow your house down?
August 03, 2006
The economy is at a crossroads. Inflation is increasing and economic growth is slowing. The Federal Reserve knows they created inflation with their recent stint of economic stimulus, but is worried attempts to cool the economy could cause a major... READ MORE
Buying Opportunity?
July 03, 2006
On May 16th 2006 we posted an article on our MAXfunds.com website entitled, “Dow Nears Record High - Dumb Money Excited, Smart Money… Not So Much”. The crux of this article was our observation that smarter investors did not seem... READ MORE
Why Bother?
June 03, 2006
After the recent market slip – which was particularly unforgiving to emerging markets and other hot areas – we received a great question from a subscriber that some of you may also be asking: After suffering through the recent decline... READ MORE
Oils Well That Ends Well
May 04, 2006
In case you’ve missed the nonstop media coverage, gasoline prices are again approaching $3 a gallon. Does this “crisis” situation offer any investment opportunities? Can it derail the economy and stock market? And why is gas so expensive anyway? Last... READ MORE
Crash?
April 04, 2006
Every investor fears a stock market crash. The idea of losing 20% or more of your net worth in a matter of hours is the ultimate nightmare. Oddly enough, the mundane (and molasses-in-winter slow) market events tend to hurt investors... READ MORE
Wea Culpa
March 02, 2006
The Jensen Fund (JENSX) has been kicking around since August 1992. Unfortunately for investors, the fund has only beaten the Dow or the S&P500 in three calendar years since then. So far in 2006, Jensen is underperforming these indices, just... READ MORE
Something's Happening Here
February 02, 2006
We're please to introduce the MAXadvisor Newsletter, version 2.0. The MAXadvisor Newsletter is now MAXadvisor Powerfund Portfolios. But don't worry. Besides the new name, a streamlined design, and some new features, not much has changed. We're managing our model portfolios... READ MORE
Flippant
January 02, 2006
As we head into the New Year investors are faced with a strange situation in the bond market: the yield curve is flipping. Flipping is more commonly known as an inverted yield curve. In such a rare event, the yield... READ MORE
The Fund Christmas Present You Don’t Want
December 02, 2005
Sure April 15th gets most of the glory, but in the world of mutual funds, tax time is really in December. Why? Because that’s when stock funds typically distribute taxable gains to fund shareholders. Get the MAXadvisor Newsletter's 2005 Capital... READ MORE
Helicopter Ben
November 02, 2005
From an investing point of view, the second most important person in government is the Chairman of the Board of Governors of the United States Federal Reserve - or head of the Fed. Ronald Reagan appointed current Fed Chairman, Alan... READ MORE
When Disaster Strikes
October 03, 2005
Our last article about economic growth and future investment returns was penned before Hurricane Katrina became the most destructive hurricane in the history of the world. While there have been more powerful hurricanes, the fragility, poverty, and population density in... READ MORE
The Next 2 to 4 Years
September 02, 2005
Investing options abound. Forget all the hundreds of thousands of individual stocks, mutual funds, bonds, hedge funds, CDs, and annuities, there are also non-publicly traded ownership interests in businesses, and hundreds if not thousands of specific industries, regions, and sectors... READ MORE
The illusion of safety, the magic of risk
August 01, 2005
Every investment has risk. Even an FDIC savings account at a bank has some risk. While the risk of the bank going belly up and the government bank insurance program being unable to pay your claim is effectively zero, the... READ MORE
Reading The Big Fund Tea Leaves
July 01, 2005
We’re always trying to figure out what categories of funds are best positioned to perform well going forward. These attractive fund categories often are in areas fund investors don’t like. This contrary strategy works well in investing because where lots... READ MORE
An interesting brokerage option for the fee hater in all of us
June 03, 2005
A few months ago we discussed several brokerage supermarket choices in response to Scottrade raising their fees from zilch to $17 per trade to buy and sell certain funds (others remain NTF, or no transaction fee). Since the easiest way... READ MORE
Changes
May 02, 2005
We've been beating the market indexes pretty handily (and with less risk) across our portfolios these past three years, in both up and down markets. As we've noted in recent commentaries (and our latest category favorites report), it's time to... READ MORE
Trade Winds
April 02, 2005
In our last Our Favorite Funds report (released in February) we downgraded several fund categories. Generally strong performance over the last few years in those categories, coupled with investor enthusiasm, were the two main reasons for the downgrades. Later this... READ MORE
The high road and the low road
March 01, 2005
One aspect that makes investing so frustrating is the unpredictable pattern stocks follows. The market is like a drunk stumbling home from a bar - you can’t expect a straight path, but you can be reasonably sure of the final... READ MORE
Time to Choose a New Broker? - Part II
February 02, 2005
Last month we shared the unfortunate news that Scottrade is raising their mutual fund buying fees. This month we will go into greater detail about the alternatives to Scottrade. All of the funds in our model portfolios that are currently... READ MORE
Time to get a new broker?
January 03, 2005
We’re cheapskates at MAXadvisor. Skinflints, penny pinchers, tightwads. Besides paying careful attention to expense ratios, we bring our cost conscious thinking to brokerage platform selection. For MAXadvisor Newsletter subscribers, the most efficient way to invest our model portfolios is through... READ MORE
The Tax Man Cometh
December 02, 2004
Get the MAXadvisor Newsletter's 2004 Capital Gains Report PDF by clicking here Sure April 15th gets most of the glory, but in the world of mutual funds, tax time is really in December. Why? Because that’s when stock funds typically... READ MORE
A MAXadvisor Spook Story
November 02, 2004
With Halloween all wrapped up, we felt now is the time to discuss our current investing fears. Here are the two biggest concerns today: 1) The nagging sensation that nothing is out of favor Hunting for the best funds is... READ MORE
Fannie Mayday
October 03, 2004
The regulatory spotlight returned to the world’s largest mortgage buyer, Fannie Mae (FNM), this past week. What they see is not pretty. And neither is what the worst case scenario would mean for your mutual fund investments, to say nothing... READ MORE
Election Investing
September 02, 2004
With the Republican National Convention in full swing this week, we thought we’d explore how the November election could affect our investment strategy. The economy and the stock market are much bigger than any one elected official, even the President.... READ MORE
How Low Do You Go?
August 02, 2004
With the recent market weakness some MAXadvisor subscribers may be wondering if we are planning trades in our model portfolios. As the market moved higher over the last year we made changes, selling some of our hotter stock and bond... READ MORE
Up, Up and Away
July 02, 2004
Throughout U.S. history American industry has evolved from agriculture, to manufacturing, to services, and now to technology. When a transition is complete the last great industry continues to exist in the economy, but grows at a slower pace and becomes... READ MORE
The Economics of Oil
June 02, 2004
Suddenly oil is on everyone’s mind. It was inevitable – high oil prices always attract media and investor interest. Oil demand is up, supply is weak, fears are high, competition is low. Will high oil prices kill the economic goose... READ MORE
Easy Does It
May 01, 2004
At the end of April we made trades in three of our model portfolios. We don’t make changes to our model portfolios often, but when we do those changes generally fall into two camps: structural and clerical. Structural trades are... READ MORE
Two Weddings and a Funeral
April 01, 2004
Fund investors – knowingly or not – follow one of three broad investment strategies. Two have varying degrees of success, one all but guarantees failure. They are: 1. Buy and Hold 2. Buy Low / Sell High 3. Buy High... READ MORE
Why We Sold
March 01, 2004
We don’t trade our model portfolio very often. Scan through the changes history for any model portfolio and see for yourself. Trading costs money. Frequent trading incurs excess costs by realizing taxable gains at inopportune times (and higher rates), generating... READ MORE
Where are the Munis?
February 01, 2004
While each of our model portfolios are carefully constructed to deliver high risk adjusted returns, we can’t design them to fit everyone’s individual needs perfectly. We discussed many of the issues you need to think about when managing your portfolio... READ MORE
The Bland Science
January 15, 2004
One media trend we’ve noticed in the last few years has been the spread of economics as mass market news. Terms and ideas that had barely been heard outside of federal reserve meetings started appearing on the front pages of... READ MORE
How to Marry a Model
December 15, 2003
All seven MAXadvisor model portfolios have had great years, but they won’t make any of our subscribers any money if nobody actually invests in them. To make the model portfolio investing process as easy as possible, we’ve developed this short... READ MORE
It’s (Still) All Relative
November 15, 2003
Stocks were very strong in October, with the Dow and S&P500 up just over 5% for the month. The Russell 2000 index of small cap stocks and the Nasdaq continued their steep ascent, up 8.4% and 8.13% respectively. Bonds fell... READ MORE
Are Mutual Funds a Sham?
October 15, 2003
As the MAXadvisor newsletter is a mutual fund investing advisory service, some of you are probably wondering what our take is on the burgeoning mutual fund scandal. Are mutual funds bad news, MAX, and what can an investor do to... READ MORE
Great Expectations
September 15, 2003
The market just won’t quit. The S&P500 was up just under 2% in August and the Dow was up about 2.25%. The real excitement remains with the Nasdaq index, which was up around 5% for the month. Small caps stocks... READ MORE
Changes
August 15, 2003
First, a quick recap of the markets in July: Stocks were strong, with the Dow up 3% and the S&P500 up 1.76%. The Nasdaq continued a sharp ascent, climbing 6.92%. Small cap stocks were not far behind up over 6%.... READ MORE
How We Manage
July 15, 2003
How We Manage Markets were up slightly in the leafy month of June. The S&P 500, Nasdaq, and Dow all rose between 1% - 2% for the month. Bonds were weaker, with the long term U.S. government bond index down... READ MORE
C.O.S.T.S.
June 15, 2003
C.O.S.T.S. The market was hot again in May. The Dow was up 4.72%, the S&P500 up 5.26% and the Nasdaq up 9%. Government bonds were no slouch either, with long-term treasury bonds up 5.7%. Stocks are rising because investors think... READ MORE
Diworsification
May 15, 2003
April was a pretty darn good month for stocks. The S&P500 was up almost 10%, the NASDAQ 9.2%. April was also pretty darn good for bonds. Funds than invest in longer-term bonds were up about 2%. It was even better... READ MORE
Performance Review
April 15, 2003
Our Past Performance April 15 is tax time, but we’re resisting the urge to write an article about funds and taxes. I figure you’ve read more than enough articles about tax time by now this month. Besides, most investments are... READ MORE
January Effect
February 15, 2003
When last months newsletter was penned (rather typed) in mid-January, the Dow stood at around 8,700. Just last Thursday the Dow was down 13% from those levels. The market has since rebounded a bit, but is still off around 10%... READ MORE
Bonds Come Back
January 15, 2003
December was weak for stocks, but not as weak as one might expect given the torrent of bad economic and political news. The S&P500 and the Dow were both down just over 5%, as were small cap stocks, while the... READ MORE
Flight to Low Quality
December 15, 2002
November was another fine month for stocks. The S&P500 and the Dow were both up over 5%, while the NASDAQ rose over 11%. Small cap stocks were somewhere in-between, with the Russell 2000 (a small cap stock index) up around... READ MORE
Market Envy
November 15, 2002
Finally, a good month for investing. October, a notoriously stormy month on Wall Street, turned out to be about as good as it gets. We saw a near complete reversal in the market behavior of the last few months. Areas... READ MORE
Theory of Relativity
October 15, 2002
The Theory of Relativity After a more or less flat August, the market continued its long, painful downward spiral in September, with the Dow, NASDAQ, and S&P500 each down just over 10%. While everyone is now beating the bond drum... READ MORE
Gentlemen Prefer Bonds
September 15, 2002
August started off well enough with the market continuing up after a late July rally. Then it sort of petered out. The month wound up being pretty flat across the board - S&P500, Dow, NASDAQ, small cap value stocks etc... READ MORE
I Fall to Pieces
July 15, 2002
If the stock market were a song, it would be "I fall to pieces" by Patsy Cline. June was terrible, with the Dow, S&P500, and NASDAQ down 7.1%, 7.7%, and 9.5% respectively. So far, early July looks worse. As I... READ MORE
April Showers
June 15, 2002
So much for April showers bringing May flowers. Despite some volatile days, May saw most of the major indexes not do much of anything. But then, flat may be about as good as it gets in these turbulent times. Any... READ MORE
More of the Same
May 15, 2002
More of the same. April was another lousy month on Wall Street. The Dow had its worst April since the 1970's, down 4.31%. The broader S&P500 index fell a sobering 6.06%, and the tech heavy (remember when this used to... READ MORE
10,000 Forever?
April 15, 2002
Is it me, or does it seem like the Dow has been kicking around 10,000 forever? Forever actually started in 1999 when the Dow first broke 10,000. It's been kicking around in the 9,000 - 11,000 range ever since. That's... READ MORE