Portfolio Issues - Liquidity In finance, liquidity means that you have access to your money quickly. Most of us don't think about liquidity until we need it. Cash is liquid, unless it's locked in a vault and you've forgotten the combination. Stocks and bonds are liquid - you can turn them into cash quickly, at a relatively low cost. You might think it odd that we like liquid investments if we're long-term investors. But we think you should have the ability to convert investme

Portfolio Issues - Risk We talk often about the expected return from US stocks, which most people would say is about 10%. That's held true whether you look back over 100 years, or 30. But here's an interesting question: Over the last 25 years, how many times has the S&P 500 ended up with an annual return between 9% and 11%. Answer: Once, in 2004. So averages can be deceptive. This is where standard deviation comes in, to help us understand the range of outcomes. For US stocks

Portfolio Issues - Gambling vs Investing A number of long-time investors have noted that the stock market feels a bit more like a casino...

Portfolio Issues - Diversification We all have a common sense view of what diversification is: Don’t put all your eggs in one basket. But...