The Past is the Past

This is a very good article from fellow advisor Carl Richards on the topic of mental anchoring . This is known as "stickiness" and has been a big issue in the real estate market over the past couple years as well as the stock market. What you paid for a house or a mutual fund or a stock does not make the price of that asset any different today. We need to realize that and approach our portfolios in current value terms instead of letting the past (what we paid) dictate our behavior.

Financial Non Reform

The latest work product emanating from Washington in the form of the 2300 page Financial Reform bill is now law. Only it does very little to actually reform but rather delivers more power to the very regulatory bodies that failed us in 2007-2008. A great deal has been written about the evil large Wall Street bankers and indeed some of that is justified particularly when it comes to protecting clients and acting in their best interests . Not as much has been written (I looked but could not find a suitable piece to link here) about the abject failure of the existing regulatory regime including many in Congress who crafted this new law.

So, how will it impact markets? No one knows as there will be unintended consequences on virtually every page that likely will outweigh any possible good in the law. What we do know, is Fannie and Freddie are still out there with an unlimited checkbook yet virtually worthless (both were de-listed from the NYSE recently as their stock prices are well under $1/share). Eventually, this is a problem that will have to be solved . Given all of the headwinds from the "legislate by the pound" crowd in Washington, the markets have been quite resilient . Stay tuned.

Stock Market Earnings

The quarterly earnings parade started yesterday and the early signs are positive. Today marks the 6th straight up day in the market (assuming it holds) following 7 straight down days. Remember... markets go up and down, not up and up. For what its worth- July is the best overall month for the S&P 500 for the 1928-2009 timeframe (in case you are curious- September is usually the worst).

This Way or That?

Found a pretty good article espousing the two different views investors are taking at present. These distinctions, of course, are among the main reasons we always want exposure to both the equity and fixed income markets. It is likely not either or but rather both to some degree. Our approach helps relieve the stress and confusion of investing with a clear empirical structure for managing wealth.

List of New Taxes

This is a fairly comprehensive list of new taxes heading our way in 2011 . Depressing to read and I suspect depressing to the larger economy as well.