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A PUBLICATION OF FUND FAMILY SHAREHOLDER ASSOCIATION • VOL. 25, NO. 4
Six of One, Half Dozen of Another?
IT’S BEEN A TERRIFIC SIX-YEAR BULL RUN.
So are we at the tail end of a raging bull
market that’s about to be gored? Or does our slow-growth-not-no-growth economy drive
prices even higher? It depends on your perspective.
The catalyst for these musings is the recent run in the NASDAQ Composite, which
crossed 5000 for the first time since March 2000—at the peak of the tech bubble—on
March 2. For some investors, this signals we are back in bubble territory. In my book,
though, 5000 is just a BRN, or “big, round number.” Forget all the posturing around it.
Today’s NASDAQ, unlike in 2000, is made up of companies that are hardly selling at
astronomical multiples of earnings, as they did 15 years ago, and that actually pay divi-
dends, something they didn’t do those many years ago. Note that I said they
have
earn-
ings, which by itself distinguishes them from the highflyers of the dot-com age.
But a better way to look at the recent surge in stock prices is to compare returns over
the six years since the market bottomed on March 9, 2009, to the period starting at the
market’s peak on Oct. 9, 2007, prior to the financial crisis and massive bear market of
2008 and 2009. From the bottom through the end of March,
500 Index
has returned an
outstanding compounded annualized return of 22.6%. If that sounds bubbly, well it is.
But if we instead measure from the prior market top, about seven and a half years ago,
500 Index’s annualized return is a much more conservative 6.0%, which doesn’t even
match the average 9% to 10% return investors have historically earned by investing,
long-term, in the market.
The Independent Adviser for Vanguard Investors
and FFSA are completely independent of The Vanguard Group, Inc.
RETIREMENT
Start Your Teen Early
IT’S A GIVEN.
Year after year, when I suggest that you or your parents should open an
IRA for your teen or grand-teen, I hear from FFSA members, friends, and even family
who say, in a nutshell, “Great idea.” And it is. Helping a young person get on board the
retirement train may not get you lots of appreciation today, but trust me, the beneficiary
of your forward thinking will thank you for years to come as they move into adulthood.
Whether you call them Millennials, Gen Ys, or Echo Boomers, the Internet generation
is a massive group of teens and 20-somethings who could use a swift kick in the pants
when it comes to planning for retirement.
I know it sounds a bit crazy to talk to teenagers about retirement and IRAs. I can hear
the howls of derision. “Retirement? Who are you kidding?” Most kids are, not surpris-
ingly, more interested in Instagram and Twitter than they are in retirement. In fact,
DOW JONES INDUSTRIALS
March Close:
17776.12
STANDARD & POOR’S 500
March Close:
2067.89
3900
4200
4500
4800
5100
M F JD NOS AJ JMA
NASDAQ COMPOSITE
March Close:
4900.88
0.00%
0.01%
0.02%
0.03%
0.04%
M F JD NOS AJ JMA
3-MO.TREASURY BILLYIELD
March Close:
0.03%
1.6%
2.0%
2.4%
2.8%
3.2%
M F JD NOS AJ JMA
10-YR.TREASURY NOTE YIELD
March Close:
1.93%
15600
16275
16950
17625
18300
M F JD NOS AJ JMA
1750
1850
1950
2050
2150
M F JD NOS AJ JMA
AVERAGEVANGUARD INVESTOR*
March:
-0.6%
YTD:
2.1%
-3.0%
-2.0%
-1.0%
0.0%
1.0%
2.0%
3.0%
4.0%
MF JDNOSAJ JMA
*See the footnotes on page 2.
Model Portfolios................................................................ 2
Moving More Overseas.................................................... 3
March Special Distributions.............................................. 5
Going Against Convention................................................. 6
Performance Review.................................................... 8-11
Should You Fly to Safety?................................................ 12
Buy the Manager, Not the Fund. .................................... 13
Dan’s Do-It-Now Action Recommendations.................... 16
APR I L 2015
SEE
SIX
PAGE 15
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S P E C I A L E X P A N D E D 1 6 - P A G E I S S U E
>
SEE
RETIREMENT
PAGE 3