Recent posts by Craig Stock
Craig Stock heads Vanguard's Corporate Marketing and Communications department, responsible for delivering investor information and education in Vanguard’s "plain talk" style.
We spent part of last weekend looking for replacements for our old washer and dryer, which definitely were on their last legs. In doing a bit of research before heading for the appliance store, I found an unexpected parallel with investing.
One of the biggest frustrations for investors is that there is one huge factor no one can control—the returns that the financial markets are going to provide in any given stretch of time.
When we first start investing, we probably ought to receive the serenity prayer* along with the prospectus for whatever fund or security we’re purchasing.
In an earlier post, I asked readers to share techniques that have helped them to save. After all, spending less than you earn is the essential first step in investing. Vanguard shareholders tend to be people who’ve long made thrift a habit. And it’s a habit many folks, confronted with today’s tougher economic and market climate, are trying to pick up.
I’ve been thinking about predictions the past few days since an old pal, Jim, called—his voice brimming with cheer. It was after another of those depressing down days in the stock market that we’ve seen all too often lately. Jim, a longtime options trader, is still involved in investments. I wondered why he was so chipper.
“I just realized,” he chirped, “that the market’s almost back down to where it was in 1995, when you were saying you thought it was getting overvalued.”
Every year, I look forward to newspapers’ “what’s in/what’s out” lists.
High up on the financial “what’s out” list in 2009 is “leverage”—borrowing money to make a bigger bet, whether on housing, commodities, currencies, collateralized debt obligations, or corporate buyouts.
And the “what’s in” list has to have a home for thrift. The notion of saving for a rainy day tends to come back in fashion whenever we’ve been through the kind of economic downpour that has hit investors in 2008.
After a drop of 40% in the stock market, even disciplined savers and investors may have to ratchet up savings to restore our portfolios. Among those who had been saving only a bit—and national statistics indicate that’s a very large percentage of households—the need for a return to thrift is even greater.