A Wall Street Journal report, published on February 21, notes that small-capitalization stock prices, as measured by the Russell 2000 Index, are nearing an all-time high. But investors aren’t pouring money into small-cap stocks.
The story, “Small-cap rise is big snooze,” notes that small-cap funds have seen steady net outflows of cash, not big inflows. “Where is the love?” asks the Journal.
A new report just came out on the retirement prospects for baby boomers.* Its top-line result was that 40% of all boomers aren’t prepared for retirement.
Whenever the topic turns to retirement in America, the language is fairly dismal. Last week, I saw a flyer from an investment company that highlighted a crisis in retirement savings. Then I read an article offering expert views on how retirement in America is endangered. This type of news coverage is pretty common. And yet, is it right?
I don’t consider myself a risk-taker. I change the batteries in my smoke detectors, double check that my doors are locked, and always wear my seat belt. I can absolutely relate to the fear that many young people have when it comes to investing.
Note: For an expanded look at Vanguard’s outlook for inflation—and an explanation of the data behind our analysis—read our interview with Joe Davis on vanguard.com.
As Vanguard’s chief economist, I’m often asked about inflation. And it’s an important topic. As the 1970s and early 1980s taught us, a persistent and unexpected run-up in inflation can significantly influence the economy, interest rates, and, by extension, the returns on stocks, bonds, and other investments.
Some of my friends are convinced that a return to the high inflation of the 1970s and early 1980s is inevitable. They point to the sharp rise in the Fed’s balance sheet (in addition to the temptation for governments to “inflate away” their national debt) as setting the stage for, at best, a return to 1970s-style inflation rates of 10% or more and, at worst, a significant crash in the U.S. dollar and stock market.
In the investment world, you occasionally come across a simple yet striking observation. Here’s an example from a recent client letter of Howard Marks, chairman of Oaktree Capital Management, L.P., and one of Vanguard’s external investment advisors:
