Investing

A lawsuit brought against 401(k) plan giant Fidelity by its own employees underscores—yet again—the importance of minimizing investment costs.

Everyone knows interest rates have nowhere to go but up. It is only logical to avoid the inevitable “bond crash” by selling now, right? Not so fast.

Successful long-term investing is a function of persistence and patience, not timing. A well-diversified portfolio can withstand market cycles and deliver solid, long-term returns without subjecting the investor to the risk and stress of accurately choosing entry and exit points.

Why—in the face of such overwhelming evidence to the contrary—do investors and managers continue to believe they can ‘outperform’ markets? Two words: Fees and Overconfidence. The latter suggests investors are living in a fairy tale world where everyone is strong, good-looking and an above-average stock picker. But two of the world’s most sophisticated institutions are waking up to the fact active management has failed them. Shouldn’t you?

 In our view, the primary role of bonds is to provide safety and capital preservation when they are needed most—during the inevitable periods of stock market distress.  Despite legitimate and growing concern over our country’s financial condition, recent examples continue to illustrate the role U.S. Treasuries play as the ballast of a well-diversified portfolio.