Investment Management

The annualized growth rate for the United States economy was approximately 2% for the first half of this year. Given the massive amounts of monetary and fiscal stimulus from the federal government, this growth rate is considered anemic at best,… Read More

At any given moment, investors are confronted with a vast array of economic and political issues that affect the global investment landscape. These often dire events create market uncertainty—which, in turn, leads directly to investor apprehension. Based on our conversations… Read More

What is Quantitative Easing (QE 2), and how does it work? Here is how we define it: An attempt by the Federal Reserve to reduce longer-term interest rates by buying longer-term government securities in the market for cash (which the… Read More

Clients often ask us how much of their money is invested in foreign countries. Usually, they have heard that economies in countries such as China, India, or Brazil are growing faster than the U.S. economy, and they want to make… Read More

It’s no secret that bond portfolios have outperformed stock portfolios through August of this year. Stocks have performed poorly as the economy weakened in the second and third quarters, while bonds have benefitted from investors reaching for yield and safety…. Read More

The Goldman Sachs story is arguably the most important story on Wall Street because it calls into question the nature of how “markets are made” and the conflicts that exist between brokers and their clients. Brokers operate under a “suitability”… Read More

Will our government’s massive, potentially out-of-control spending and stimulus programs eventually lead to high inflation? Many of our clients have asked this question and want to know what BWFA will do to protect their investments against this threat. We think… Read More

The Merriam-Webster Dictionary defines risk as, “the chance that an investment will lose value”. This “chance of loss” is what the professional portfolio managers at BWFA strive to manage on an ongoing basis. Before delving into the intricacies of BWFA’s… Read More

We are often asked about how BWFA has become one of the most successful Fee-Only financial planning firms in the Mid-Atlantic. What’s our advantage, our secret? Our “secret” isn’t really a secret: Our clients make us a better firm. Because… Read More

Understanding the financial marketplace is a critical part of a portfolio manager’s job, and listening to experts is one of the ways we gain important insight into what is going on. Of course, we at BWFA take any comment from… Read More

The 38.5% drop in the S&P 500 during 2008 and the further drop of 25% by March 9, 2009 have tested the tolerance for risk of individual and institutional investors alike. This has been the worst stock market decline of… Read More

One of the casualties of the recession and stock market plunge has been investors’ confidence in the integrity of the public equities markets and the companies they represent. It’s no secret that management of public companies does not always act… Read More

Have you heard of equity-indexed annuities (EIAs)? They promote the dual benefits of a guaranteed, minimum return (limited downside) with market returns (upside potential) based on an equity index. On top of that, you can even defer taxes for years… Read More

The expression “catch a falling knife” refers to buying stocks or bonds which have fallen significantly in price, with the hope that they will soon return to their former price. If done well, the buyer nets a handsome profit in… Read More

If a brokerage house fails due to bankruptcy or fraud, the Securities Investor Protection Corporation (SIPC) makes sure that investors who hold their stocks, bonds, and mutual funds at that brokerage house get all of their shares back in a… Read More

With talk about a recession widespread, investors are naturally concerned about what will happen to their stocks if a recession actually occurs. Is it time to sell stocks to avoid further declines if the economy continues to weaken? Is it… Read More

Like a spreading fungus, the subprime mortgage crisis has gained footholds across the country and has the potential to bring on a recession in the U.S. — undermining an economy that is in most respects fairly robust. The crisis has… Read More

In July, major stock indices reached record levels. For the first time ever, the Dow Jones Industrial Average closed above 14,000. The S&P 500 achieved a record level as well. Subsequently, there has been a sharp downturn in the market…. Read More

Investment advisors today are frequently asked by clients where they can find an investment that has a good return, will maintain principal value, and won’t keep anyone up at night worrying about credit quality. Instruments that offer a high dividend… Read More

An important issue that sneaks up on people as they approach retirement is how to cope with the hairs that are popping out of strange places. Another one is how to fund retirement from your savings. Living off your “nest… Read More

Each quarter, we send our investment management clients two reports, the Portfolio Statementand the Portfolio Performance Summary. We have designed these reports to be easier to understand than typical brokerage statements, but they still may be confusing for those not familiar with… Read More

One of the questions we get frequently is “How do you select investments?” In this article, I comment on 12 criteria we use to evaluate potential investments for our clients. Only Publicly Traded Securities — We want the relative security provided… Read More

Mutual funds have been around since the 1920s. Since then, they have grown exceedingly popular with the masses. However, high net worth individuals and sophisticated investors continue to choose individual stocks and bonds over mutual funds. Why do they make… Read More

Many people regard the S&P 500 Index as a good measure of how their portfolio is doing. However, an investor with a well balanced and diversified investment portfolio should have outperformed this index over the last five years. That is… Read More

We often advise our clients with taxable estates to consider gifting strategies that will reduce the portion of their estate subject to estate taxes and also meet their charitable or family goals. The recent rise in interest rates has made… Read More

When preparing estate plans, many people believe they must name an institution, such as a bank, as trustee of a trust. Sometimes, naming a professional trustee makes sense, but in many cases it is not necessary. Before you name a… Read More

Individual stocks have advantages over other types of investments when it comes to estate planning. They offer a cost effective way to reduce income taxes, can easily be sold if necessary, and offer an effective way to pass on your… Read More

Sometimes we forget just how poorly some large, well established companies can be managed. This list reminds us that a “buy and hold” strategy is unwise. There is no substitute for careful selection and continual reevaluation of your investments. The… Read More

Does working with an Investment Advisor mean giving up control of your investments? Not necessarily. At BWFA, our clients are always in control of their investments. But being in control doesn’t mean that clients have to do all the tedious… Read More

BWFA invests a piece of almost every client account in foreign stocks and bonds. In this article we give you our point of view about why these securities add value to our client accounts, and how we participate in foreign… Read More

Mutual funds offer small investors a way to participate in the financial markets. But, in order to earn a fair return, investors need to do their homework. Evidence shows that most investors do poorly because they select inappropriate funds and… Read More

Fidelity Magellan grew to be the largest mutual fund ever, and has also declined in size more than any other fund. The story of how this came about may help our readers see what went wrong. The Fidelity Magellan Fund… Read More

This article offers a glimpse at how Social Security “private accounts” might work and what you should do if private accounts become part of the Social Security system. We’ll leave the vexing questions regarding whether private accounts are good social… Read More

Most investors pay scant attention to portfolio risk management. In this article we discuss the importance of risk management, and how we handle portfolio risk for the investment management clients of BWFA. In the 1990’s, as the value of their… Read More

The biggest risk mutual fund investors face in earning a decent return may be their own behavior. A recent study by Dalbar, a financial industry research group, examined real investor returns over a nineteen-year period. It concluded that, �Investment return… Read More

Conventional wisdom says that investors should determine the percentage of their portfolio they invest in stocks by subtracting their age from 100. The rest of their portfolio should be spread between bonds and cash. According to this wisdom, a 30-year-old… Read More

Congress recently passed a bill reducing taxes on dividends from a maximum ordinary income rate of 35% to no more than 15%. This is great news for investors, especially those needing income from their portfolios. We believe the market has… Read More

Before deciding which investments are best for you, you should look closely at the new tax law, which lowered the rate you pay on dividends and capital gains to 15%. This law has provided investors with some really significant opportunities… Read More