Baby boomers throughout Maryland are facing a two-pronged assault on their investment portfolios. As we all know, stocks have performed very poorly over the last ten years. Equally as important and probably less obvious is that investment income has been under assault as well. Not only have yields been falling, but during the last recession many companies cut their dividends. It has become very difficult to grow portfolios in the traditional way,and just as difficult to grow investment income. The importance of a growing income stream cannot be overstated, especially as baby boomers begin to retire. Growing investment income is a problem—and that problem in itself is growing. (more…)

Value is in the eye of the beholder. I have been in the investment business for 18 years and have met all kinds of different investors—growth, value, momentum and technical. The one common thread among them is that they believe they are purchasing stocks at a good value. Quite simply put, they are buying a stock trading below their estimate of what it is worth. In this sense, all investors are investing for value. But value investing trumps investing for value over long periods of time.

Investing for value and value investing are very different. Value investing is an often-misunderstood investment style. Benjamin Graham and David Dodd are the founding fathers of value investing. Their book Security Analysis is still considered the bible for true value investors and a must-read for all investors. Although value investing has evolved over time, it is based on fundamental analysis used to derive the intrinsic value of a company. This calculated value is compared to the current share price for relative attractiveness. (more…)