John Wasik

CHICAGO, April 22 (Reuters) – In the wake of a dramatic gold
sell-off over the last two weeks, investors are looking for
other ways to hedge against inflation.

They are realizing that the metal is a false prophet of the
hyperinflation that gold bugs have been expecting since 2008.
It’s clear at this point that the scenario probably won’t
materialize in the immediate future. Assets of the SPDR Gold
Trust, the leading gold bullion exchange-traded fund,
have dipped to the lowest level since 2010 on a wave of
redemptions.

Gold, which on Monday traded $100 over a two-year low of
$1,321 on April 16, is also proving not to be a safe haven from
global economic woes. The metal was supposed to be a defensive
shadow currency in a world going to hell, but it turns out to be
highly volatile as well.

The latest massive gold selling was initially ignited by the
prospect of slowing Chinese and American economies, fears about
the euro and dollar, and banking turmoil in Cyprus.

WORTHY ALTERNATIVE

Investors looking for inflation protection, income and
appreciation should instead consider real estate investment
trusts (REITs) as worthy alternatives. The lion’s share of
nervous investor attention has been focused on gold, and few see
REITs as a perennial retirement fund holding or
inflation-fighter.

CHICAGO, April 19 (Reuters) – Green stock funds have always
made me blue. There are dozens of socially responsible,
“clean-tech” or environmentally friendly mutual and
exchange-traded funds, but I have a hard time recommending them.
They are typically too expensive because of their fees, have
poor returns and are too concentrated in highly volatile stocks.

Take the PowerShares Wilderhill Clean Energy ETF,
which holds alternative energy/conservation companies based on a
56-stock index. At nearly $140 million in assets, it’s one of
the most popular green funds. Yet volatility and poor
performance in the portfolio’s solar and other alternative
energy stocks have produced awful total returns.

The PowerShares fund is down 24 percent and 27 percent for
the three- and five-year periods through April 17. It has a 0.7
percent annual expense ratio, which is high for an index fund.
More than one-third of the portfolio is in “information
technology” stocks, a category that includes several battered
solar companies.

CHICAGO, April 16 (Reuters) – Most emerging market talk
focuses on BRICS – Brazil, Russia, India, China and South Africa
- or maybe even TIMPs – Turkey, Indonesia, Mexico and the
Philippines. But one sizzling emerging market that has not been
adopted into an investing acronym is Thailand.

Thailand has been growing rapidly relative to sluggish
Western economies. Like its Southeast Asian cousins Indonesia,
Singapore and Vietnam, Thailand has a relatively young
population and a growing middle class, and it is building
infrastructure along with a commodities trade.

Thailand has had its political problems, including a coup,
in recent years, but now it is focused on an export economy,
driven by demand from China and India. Global investors are
attracted to the country’s cornucopia of natural resources such
as alumina, cocoa, gas, oil and sugar. Some 60 percent of the
Thai gross domestic product is export-driven, which also
consists of autos, rice and electronics.

CHICAGO (Reuters) – On paper, multi-asset funds look great. These tactical “fund of funds” let an investor cover objectives ranging from inflation protection and income to international growth, while enabling managers to diversify quickly and avoid market sell-offs.

On the market for years, multi-asset funds have gained traction since the 2008 financial crisis. They have come into focus lately because many retirement plans have added them to their line-ups.

If the funds performed their jobs well at a low cost, then they would make sense to me. Picking a diverse mix of asset classes is challenging, and it would be helpful to average investors to have it done for them.

CHICAGO (Reuters) – I have always found that laziness is a virtue when it comes to managing my own money. The less I trade, the better my performance.

Years ago, in an attempt to come up with a hypothetical portfolio that provided low-cost diversification, I created what I called a “Nano” – small and compact – portfolio as a investment strategy intended to capture returns from the U.S. and global stock, bond and real estate markets. Lazy portfolios are generally passive and rebalanced once a year. The idea is to set the allocations and leave them alone – not try to time the market.

Thanks to MyPlanIQ.com, a useful website that creates and monitors portfolios (I have no connection to it), I have been able to track the performance of my virtual Nano holdings over time. My set-up has done reasonably well, but as with all portfolios, results depend on the period being looked at and on performance relative to the market as a whole.

CHICAGO (Reuters) – With the U.S. stock market rallying this year, it may be enticing to take extra cash on hand and ride the bull.

If anything, it is all too easy to pour contributions into actively managed U.S. large-stock funds. Some 90 percent of all retirement plans surveyed last year by the Plan Sponsor Council of America, an employer group, offered actively managed domestic stock funds, and most IRAs and 401(k)s hold these funds.

But a stock fund may not track the market as closely as an index fund. And there are several other asset classes that are worth scrutinizing. If you are jumping into the market with a bit of cash that goes beyond what you already have set up – say, $10,000 out of savings – it would make sense to cover a broad range of global options instead of exclusively focusing on U.S. large-company stocks.

CHICAGO, April 1 (Reuters) – This is no April Fool’s day
joke, but catastrophes are good for stocks – eventually. The
market usually boomerangs into massive rallies in the wake of
them. That’s what seems to be happening now, which sustains the
argument for a continued rally after the S&P 500 index and the
Dow Jones Industrial Average hit new highs last week.

You can see the herd-like movement of mass emotions play out
in history. John Maynard Keynes called it “animal spirits” – the
spontaneous optimism that causes investors to keep buying.

I was not surprised to learn that the greatest stock rally
in American history was after the catastrophe of World War One:
between 1921 to 1929, the market gained about 500 percent,
according to the Leuthold Group, a Minneapolis investment
research firm.

CHICAGO (Reuters) – When interviewing a money manager, most investors want to know investment performance. It is a natural question, but there is much more you need to know beyond absolute returns.

In lieu of focusing exclusively on annual performance, it will be more important to know about a money manager’s record on capital preservation and expenses.

Anyone can do well in a bull market and many have lucky years. But when you are looking for a money manager, you want to find out what capacities he or she has beyond that – what makes them earn the fee? Here are some questions that will help you get beyond the surface:

CHICAGO, March 19 (Reuters) – A sluggish U.S. economy can
actually give stocks a boost.

According to a recent study from Ned Davis Research, when
the U.S. gross domestic product growth rate was 0.5 percent or
less, the S&P 500 Index rose at a rate of 10.5 percent
per year. Conversely, when the GDP rose above 6 percent, the S&P
500 lost 4.6 percent a year.

Of course, the stock market is not always a reliable
indicator of an economy. It often displays an exaggerated
reaction to most economic news from day to day.

CHICAGO, March 15 (Reuters) – Will Rogers, the great cowboy
and humorist from Oklahoma, entertained America during the
darkest days of the Great Depression. His investing advice? “The
best way to make money is to buy a stock. Then, when it goes up,
sell it. If it’s not going to go up, don’t buy it.”

Today’s individual investors still seem to be playing this
fool’s game. Despite overwhelming academic evidence to the
contrary, most investors think that they can time the market.

But in reality, they are often just following herd instincts
or their own irrational impulses and getting trampled. While
being out of the market when it is tanking is no sin, not being
invested during a rally carries a steep price.