Frequent Questions

Why do so many people invest their retirement assets in the securities markets?

The markets provide the potential for price appreciation, dividends, and interest. The markets are liquid and there is a substantial amount of public data that is available online.

Which of the primary asset classes performs the best?

Stocks outperform bonds and bonds outperform money market funds (Capital Market Theory). If this was not true no one would invest in stocks. There is risk because this relationship does not work every year. There are years when you would be better-off in money market funds. 

Will there be another stock market crash?

Count on it! Wall Street greed is infamous for producing boom and bust market cycles. For example, dotcoms trading at 300 times earnings caused the crash in 2000-2002. Toxic mortgages almost brought down the banking system in 2008.

Does Wall Street benefit from stock market crashes? 

Yes. There are investments that are designed to produce substantial returns in falling markets.

Does this mean Wall Street causes crashes and benefits from them?

Yes. Greedy executives, who run the big financial services companies make millions manipulating markets. Goldman Sachs did not produce a $1 billion fund of toxic mortgages and pay to have the fund rated AAA. Goldman Sachs executives were paid millions of dollars for making those decisions.

How risky are bond investments?

Bond prices move the opposite direction as interest rates. In early 2014 bond interest rates were near historical lows. The next direction was rising interest rates that cause bond prices to decline. Bonds are risky investments when interest rates are low and there is the potential for falling prices. 

Why do people commit assets to alternative investments?

They may have specialized knowledge, but the most frequent reason is increased diversification. They want to invest in more asset classes than stocks and bonds. In particular, assets classes that offset inflation and reduce their risk of large losses. 

Does Paladin provide financial advice?

Our investing information is not intended to be financial advice. We strongly suggest you obtain investment advice from a qualified financial professional.