By Edward Leone JR. DMD MBA CFP RFC
Contact Information: leonee@vzw.blackberry.net
It is very enjoyable to read a broad spectrum of available information and then share it with you. One of those interesting bits of information in the Bloomberg Business Week has to do with foreign students studying in US universities and colleges. It turns out that China is the leader with 235,597 of their citizens studying in the US. India is next with 96,754 followed by South Korea with 70,627. Next is Saudi Arabia with 44,566 followed by Canada with 27,357. Depending on your orientation on such issues, the positives are that these students stay in the US legally or in violation of visa requirements and take jobs that equally trained US student might have. They may also get preferred tuition rates if they attend a state supported university in a state where the legislature has set tuition for foreign students at the same level as US state residence. The down side is that they may go back to their home country after learning something about the American way!
Should you engage in value investing of equities or growth investing of equities? It depends on your time horizon and risk tolerance. Long term, value investing wins, but short term depending on market conditions, growth stocks may shine according to the Financial Advisers’ Journal. In the same publication, Bill Gross the manager of the world’s biggest bond fund, tells us that very low interest rates are preventing many from retiring since it is more of a challenge to establish a fixed income sector of a portfolio which produces adequate income. When will interest rate increase and will that event hurt the value of equity investments?
We have been in a rising equity market environment for several years now. Are equity investments over valued? I say not yet. The S&P 500 PE is at 17 which close to the historic average but 40% bellow the PE of the year 2000. We must also consider the effects of inflation over these past 14 years as a factor. Bull markets don’t usually end when valuations are average!!
Forbes magazine tells us that Bill Gates and Warren Buffett lead the pack of US billionaires. My, what a challenging problem to have as a member of such a club!
FA Journal tells us that most of those at retirement age have not saved enough to carry them through a full retirement period without running out of money. A significant number of retirees have a significant asset in their residence. As a result, reverse mortgages are becoming a favored strategy to generate retirement income. If you are considering such a move, be sure you understand all terms and fees involved.To build an adequate retirement fund, start saving early in life, retire at full retirement age for Social Security benefits, save at least 15% of your income in those preparation years in a qualified retirement vehicle, project the possibility that you may live to be 100 and make sure an adequate percent of you portfolio is invested in equities to insulate you from the effects of inflation and increases in the cost of living as the future unfolds!
For The Record:
DJIA 16,573
NASDAQ 4,276.46
S&P500 1,890.90
SUGGESTED READING: “Ethics and the Conduct of Business” by Boatright
FA
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