Low interest rates are a great deal if you are buying a house. But for folks living off the income of their investments, low interest rates can mean severe cuts in their cash flow. The national average for a one year CD is about six tenths of one percent. So a $100,000 CD is paying $600 per year. Just a few years back a retiree might have collected $4,000 or more on the same investment. Naturally, that leads many investors to search for a higher yield elsewhere. Surprisingly, one place that some are looking is the stock market. Specifically, investors may be looking at stocks that have a high dividend yield, or a high dividend relative to the price of the stock. Continue Reading…
Is It Farewell to the Fairholme Fund?
In the world of mutual funds, there is a fairly new superstar manager out there. Or perhaps I should say, there was a new superstar. The case of the Fairholme fund run by Bruce Berkowitz is a fascinating story in the world of investing. Berkowitz was named by Morningstar as the fund manager of the year in 2009. Then Morningstar named him fund manger of the entire decade! If this were basketball, he’s the Michael Jordan of the mutual fund managers, at least in recent times. Continue Reading…
Don’t Say You Weren’t Warned About Small Company Stocks
Last year was a good year in the stock market. For example, the S&P 500 returned 15 percent in 2010. The long run average for that index is about 10 percent. Foreign markets didn’t fare quite as well. An index of foreign stocks in developed economies returned only about 8 percent. That’s because investors were worried about Europe. Several countries had overspent their budgets and were threatening default. We saw young people rioting in the streets as authorities wrestled with whether to raise the retirement age from 60 to 62. That sort of news scares investors and the returns in Europe reflected that. Continue Reading…
Making the Case For International Investing
A couple of weeks back, the early morning market headline was that Ireland was in severe financial trouble. That worry continued throughout the day and it was enough to send the Dow down almost 200 points. Two days later the headline was that Ireland’s problems weren’t as bad as originally expected and that they would in fact survive. The U.S. market went back up 175 points. Continue Reading…