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Investing 101 Archive

  • With an endless stream of economic data, earnings results, analyst reports, and technical trends to follow, it's easy to see why so many investors are at a loss to figure out where the market is going at any given time.

    But beyond all of those numbers and readings, there exists a bevy of time-tested events and occurrences which have proven to possess a profound influence over the markets.

    In this installment of Investing 101, we dive into the elusive science of "market cycles," a trading phenomena that Jeffrey Hirsch, author of The Little Book of Stock Market Cycles describes as "regularly occurring, has a reason to repeat, and is driven by a real event."

    War and Peace

    While investors track dozens and dozens of different cycles, Hirsch says none is more influential than the effects of war and peace. "Once peace prevails and the troops come home and the bills come due, inflation rises up," Hirsch says in the attached video. He adds that, "Once that inflation levels off, you see the market catch up with that inflation; you see that sort of 45-degree angle, big super bull market, those 500% booms."

    Read More »from How to Take Advantage of Stock Market Cycles
  • The Ivy League consists of eight schools that are widely regarded as being some of the finest in the United States. Where the SEC is synonymous with football and the PAC-12 is known for the stereotypical "Left Coast" lifestyle, the Ivies are known for both their rigorous athletics and inflated self-esteem.

    Some of the reputation is bluster, but when it comes to their endowments, the Ivies are everything they're cracked up to be. Five of the top 10 largest university endowments in the U.S. belong to Ivy League schools — Harvard topping the list at $32 billion, Yale in second at $19 billion, and Princeton third, with a fund of $17.5 billion as of October 2011.

    Larry Swedroe, director of research for Buckingham Asset Management and author of Investment Mistakes Even Smart Investors Make, joined Breakout to walk us through the endowment investment process.

    Why do schools have endowments?

    Generally consisting of money from donations, endowments are typically put to work funding construction, scholarships, and other operational needs not fully covered by school tuition.

    Money sitting idle or parked in Treasuries earning next to nothing does no one any good. The greater the return, the larger the endowment, and the bigger the buffer between the schools and poverty. Essentially, schools have endowments for the same reason people have savings.

    What strategies do they use?

    Schools with larger endowments have more than they need for annual operations. That excess gives them an investing time frame of as as long as the school may exist. (Harvard was founded in 1636 and has no plans to close up shop.) "Eternity" is longer than even the staunchest buy-and-hold investor, but that doesn't mean there aren't lessons to be learned.

    Read More »from What Harvard Can Teach You About Investing
  • At a time of such strong demand for dividends and safety, the quest for a reasonable yield amidst historically low interest rates has become quite a competitive sport. With that in mind, for this installment of Investing 101, we brought in Marc Lichtenfeld, author of Get Rich With Dividends and Associate Investment Director at the Oxford Club, to discuss ways to get more for your money by investing in income-producing stocks. He provided the following three tips to improve your performance and total return.

    1) Perpetual Dividend Raisers

    One of the best ways to get more bang for your dividend buck is to simply get more bang — that is, to get more and more money paid to you year after year. Lichtenfeld says the universe of these so-called serial dividend raisers isn't that big. "There's about 400 companies that have a track record of at least five years [of consecutive increases], but once you get out to 10 years, you cut that number in half," he says in the attached video. And, as you might imagine, in the case of Standard & Poor's Dividend Aristocrats portfolio of companies with a 25-year track record, the list shrinks down to just 51 companies. However, Lichtenfeld warns not all of the perpetual raisers offer great yields. He suggests finding the ones that have the track record but that also authorize the biggest percentage annual increase — and pay this highest yields, too.

    2) Boring Is Good

    In an increasingly active marketplace, many investors have embraced a trader's mindset and have declared traditional buy-and-hold investing dead. Lichtenfeld disagrees with that notion and has devoted a chapter in his book (called Snooze Your Way to Millions) to dispel this notion and make the case for low-turnover and reinvestment. "If you bought $10k of McDonald's (MCD) in 2001, by 2011 you had $46k, assuming you reinvested the dividends," he says, adding that the hamburger giant has a 35-year streak of dividend increases.

    3) Aim Higher

    Right now the yield on a 10-year Treasury is about 1.4%, while the S&P 500 currently has about a 2.2% dividend yield. Generally speaking, Lichtenfeld says 4.5% is a reasonable starting yield to shoot for, and says larger yields can often be found in REITs and MLPs. "It really goes across the board," he says, pointing out that above-average yields can also be found in consumer stocks, financials, telecoms, and utilities. "You can look through a wide range of stocks and diversify your portfolio as well," he says, reminding investors that higher yields typically carry higher risks.

    Read More »from 3 Tips to Improve Returns With Dividend Stocks


(54 Stories)


Breakout’s Investing 101 helps you gain insight on money management and trading. Whether you’re managing your own retirement account, just beginning, or an advanced investor in need of a good refresher, Investing 101 will help you learn, grow, and keep you informed of the basic steps to effectively manage your money. Expect investing tips that focus on trading strategies, asset allocation, and portfolio management.

Investing 101

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