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Joseph Slife

Joseph Slife

Writer/researcher

Joseph Slife has been a news writer for the Associated Press, a college instructor, and a radio host.

From 1990 to 2003, he was a writer/researcher for Larry Burkett at Christian Financial Concepts and Crown Financial Ministries, and he served as the executive producer for CFC/Crown Radio from 2000-2005.

He first joined SMI's writing team in 2008, before going on to serve nearly six years as senior producer/co-host for WORLD Radio. He returned to Sound Mind Investing in 2017.

Joseph and his wife Joye have three grown sons.

Most Recent Articles

Money Roundup: Growth vs. Value, “Giving Small” Can Be Big, and More

Here is SMI's weekly roundup of recent articles from around the Web on investing, personal finance, and stewardship. We hope you find them helpful!

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Now Available: Personal Portfolio Tracker & Fund Performance Rankings With Data Through 3-31-21

We've updated SMI's Personal Portfolio Tracker and monthly Fund Performance Rankings with performance data through March 31, 2021.

• The Tracker: SMI's fund-performance database tracks the monthly returns of more than 25,000 traditional mutual funds and ETFs. The Tracker can filter that large amount of data and produce a concise report covering only the funds available in your employer-sponsored retirement plan, thus making it easier to apply our Fund Upgrading strategy to a 401(k), 403(b), or similar plan.

The SMI newsletter's Upgrading formula for domestic funds guides users toward either growth or value funds as appropriate, rather than maintaining both growth and value allocations at all times. Accordingly, the newsletter uses only two domestic categories: Large Company and Small Company. 

Tracker portfolios, however, classify holdings according to four domestic stock-fund categories: Large/Growth and Large/Value plus Small/Growth and Small/Value. This helps members who use alternatives to our "official" fund recommendations gauge (based on the Tracker's percentile-ranking column) how each fund they own is performing relative to its same-category peers.

Upgrading calls for selling a fund when it drops below the 25th percentile, so having a clear view of a fund's relative performance is important to maintaining that selling discipline.

Also, unlike the newsletter, Tracker portfolios show a separate Foreign category. In the newsletter, Foreign is a subset of the "Situational" category.

Note: Any fund that doesn't fit within the five categories mentioned above (Large/Growth, Large/Value, Small/Growth, Small/Value, and Foreign) will be displayed by the Tracker in a category labeled "Other Funds."

If you are new to the Tracker, watch our tutorial videos. Go to the Tracker page and click the Video Tutorials tab.

• Fund Performance Rankings (FPR): The FPR report is a 38-page downloadable PDF file containing performance data and SMI's momentum rankings for more than 1,600 no-load traditional funds and ETFs.

The funds included in the FPR are selected based on asset size, brand familiarity, and brokerage availability.

The Fund Performance Rankings report displays the bulk of domestic stock funds (both traditional funds and ETFs) across these categories: Large/Growth, Large/Value, Small/Growth, Small/Value. Like the Tracker, the FPR also uses the Foreign category. Other FPR categories include Bond funds, Target-Date funds, and Sector funds. 

Check page 2 to learn how to use the FPR report. Page 3 includes a listing of 70+ risk categories that will help you compare "apples to apples." (Each category shown on page 3 is hyperlinked, enabling you to jump to specific sections within the rankings quickly.) Page 4 of the FPR has explanations of the various data-column headings.

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A Cautionary Tale

Over the weekend, a story at MinistryWatch.com caught my eye: "Christian Billionaire and Philanthropist's Bad Bets Rattle Wall Street."

Wow! I read on.

Nobody is sure how much the money maven and Christian philanthropist Sung Kook "Bill" Hwang was actually worth before his overly leveraged investment firm suddenly and dramatically ran out of cash last week. $10 billion? $20 billion? More?

Now, banks around the world that helped underwrite his growth say they may have lost billions after his empire collapsed. A Bloomberg article...says Hwang and his company are at the center of "a multibillion-dollar fiasco involving secretive market bets that were dangerously leveraged and unwound in a blink."

One veteran investment expert summed up the meltdown this way: "This has to be one of the single greatest losses of personal wealth in history."

Here are the basic facts, as summarized by MinistryWatch reporter Stever Rabey:

Hwang bought and sold shares in stocks "on margin," meaning he borrowed funds from banks, including Morgan Stanley, Goldman Sachs, Credit Suisse, Deutsche Bank, and the Japanese bank Nomura.... In addition to leverage, [he] used risky and complex financial instruments called derivatives.... 

Hwang was betting that the value of stocks such as ViacomCBS would rise, but when ViacomCBS announced it was selling additional shares, the stocks’ value decreased. That led Hwang’s banks to demand that he bring more collateral to the table. Bloomberg called this “one of the biggest margin calls of all time.”

When Hwang couldn’t comply, the banks started a massive sell-off of the billions worth of stock they owned. The fire sale only further reduced the stocks’ value. At one time during the past week, the value of ViacomCBS stock dropped by half.... As CNBC reported, the episode "ignited a whopping $20 billion wave of forced liquidations at a slew of Wall Street banks."

Although Hwang pled guilty in 2012 to insider trading and stock manipulation in a case brought by the U.S. Securities and Exchange Commission, there are no allegations of illegality related to this recent collapse. Instead, this seems to be a worst-case scenario that became a reality.

As noted above, Hwang's investments were heavily leveraged. Stated simply, leverage uses borrowed capital as a funding source to increase the potential return of an investment.

The alluring thing about using leverage is that one's gains are magnified. But so are losses, a possibility that's often overlooked or explained away — until it happens. As investor Seth Klarman, author of Margin of Safety, once wrote about various investment risks, "The problem is that with so much attention being paid to the upside, it is easy to lose sight of the risk."

Risky business

Investing, by its very nature, involves putting money at risk. You can't avoid that. But taking on an inordinate level risk on the assumption that everything will go as planned is asking for trouble — whether you're billionaire Bill Hwang or average guy John Doe. To quote Howard Marks, another noted investor, "You might want to give some thought to how you'll fare if the future doesn't oblige."

Indeed. That's why SMI urges you to Make Sure Your Investment Decision-Making Is Inside-Out. We also stress the importance of Diversification: The Only Free Lunch in Investing. As you get older, we think you should ask, Is it Time to Reduce Your Investment Risk? Further, we suggest that When in Doubt, Take the Safe Route

And, of course, we think you should be Building Your Financial House on the Bedrock of Biblical Principles.

Keep plodding along

We hope Bill Hwang can recover somewhat and continue his support of Christian ministries and other charitable endeavors.

While there is likely more to this story than has been reported thus far, we can say that the sudden collapse of his financial holdings throws into sharp relief the wise words of Proverbs 21:5: “Steady plodding brings prosperity; hasty speculation brings poverty” (TLB).

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Is it Time to Reduce Your Investment Risk?

The story is told of a king who sought a wise and trustworthy driver for his daughter’s carriage. To gauge each applicant’s suitability, the king posed a question: “Between the castle and a nearby village, the road passes along a cliff. How close could you get the carriage to the edge without going over?”

The applicants boasted of their skill, each bragging that he could bring the carriage’s wheels within a foot, perhaps even inches, of the edge. Except for one man. “My king,” he said solemnly, “With your daughter in my charge, I would keep the carriage as far from the cliff’s edge as possible.” The king selected him immediately.

Arriving safely

In investing, as in life, you can’t avoid all risk. But — as the prudent carriage driver understood — it’s not wise to take unnecessary risks. Arriving at one’s destination safe-and-sound is the most important thing.

The wisdom of “staying away from the edge” is something you should consider carefully in your 50s and 60s as your retirement years begin to come into focus. Greater financial risk-taking, which may be quite appropriate when younger, should give way to a less-aggressive approach — especially if dialing down your risk retains a strong likelihood of getting you to where you want to go.

Let’s add some context. Investors who’ve stayed the course over the past dozen years have had the wind at their back. Consider that from the bear-market bottom on March 9, 2009, through March 8, 2021, the U.S. stock market (as measured by the Wilshire 5000 Total Return Index) rose by roughly 600%. In dollar terms, a $100,000 investment in March 2009 would have grown to about $700,000 by March of this year!

Everyone’s financial situation differs, but we suspect that such impressive performance has put many 50-something and 60-something investors in a position to lessen their investment risk from this point and still reach their financial goals.

Remember, SMI consistently teaches that the goal of investing isn’t to build the biggest possible nest egg. Instead, we believe your objective should be to build a portfolio that is sufficient — i.e., one ample enough to fund your retirement years and meet other financial goals you may have, such as those related to giving and perhaps helping to provide a Christian education for your grandchildren.

A screen capture from MoneyGuide's "What If Worksheet." ("Adjusted Real Return" accounts for the impact of projected inflation.)


Making use of MoneyGuide

Before you can determine whether you can take less risk and still meet your goals, you must be sure your goals are clear and measurable. For help with that task, we recommend using MoneyGuide, the web-based financial-planning software available to SMI Premium-level members.

MoneyGuide’s “About You” section poses a series of questions to help you clarify/refine your financial goals in the areas of lifestyle, leisure, health, generosity, and so on. You’ll also answer questions that help define your risk tolerance.

Once you have entered information about yourself — and details related to current holdings, other savings, and projected Social Security benefits — MoneyGuide can gauge how well-positioned you are to meet the goals you’ve established. In the “Results” section, the software will “Run 1,000 Trials” that project the impact of various financial scenarios, including unpleasant ones such as an uptick in inflation or a market downturn occurring as you reach retirement.

Ideally, MoneyGuide will determine that you have a high “Probability of Success” in regard to meeting the goals you’ve defined. (If your “Probability of Success” is below the “Confidence Zone,” you can adjust your goals using the “Choices” or “SuperSolve®” options in the “Recommended Scenario” area.)

If the “1,000 Trials” exercise reveals that you’re well on track toward meeting your goals, congratulations! Next, you can use MoneyGuide’s “What If Worksheet” (found under the “Create a Recommended Scenario” tab) to gauge the projected impact of reducing your investment risk. The worksheet allows you to lower your returns projections — a proxy for reducing risk — and see the impact this has on meeting your goals.

To experiment, create a “What If Scenario” by using use the drop-down menu at the top of the page. Then click the word “Go.” Next, scroll down to the area labeled “Hypothetical Average Rate of Return.” Select a return option (perhaps “Conservative” or “Moderate”) that has a “Composite Return” that’s lower than the return shown for your “Current Scenario.”

For SMI members, MoneyGuide’s default options range from 4.9% for the “Conservative” posture to 8.9%  for “Aggressive.” (To view the specific SMI-based portfolios on which these returns are based, look in MoneyGuide’s “Risk and Allocation” section under “About You.” Scroll to “Model Portfolio Table.”)

You also can select SMI’s 50/40/10 approach, which falls between “Moderate” and “Aggressive.”

Or you can ignore the default options if you prefer and input any specific rate-of-return you choose. Simply select “Entered Return” from the drop-down menu.

When ready, click “Calculate All Scenarios.” The “What If Worksheet” will display how a change in projected returns is likely to affect the “Probability of Success” of funding your financial goals.

If using an “Entered Return” (i.e., a specific rate of return you choose), we suggest you don’t make your return projection too rosy. Given current valuation levels, market returns for the years ahead aren’t likely to be as robust as returns for the dozen years just passed. So it’s wise to experiment with a range of returns that might be considered below average.

Thinking things through

The point of this exercise is two-fold. First, given the strong overall returns of the past 12 years, we want you to know if you’re closer to reaching your goals than you realize. Secondly, if retirement is only a few years away, we want you to consider if adopting a less-aggressive posture from here on can still offer a likelihood of providing what you need.

After all, there is no great virtue in steering close to the edge. The important thing is to arrive safely.

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A New Money-Management App That Emphasizes Christian Stewardship

Never ask of money spent
Where the spender thinks it went.
Nobody was ever meant
To remember or invent
What he did with every cent.

                                  – Robert Frost

Personal financial management is challenging. Yet, despite the defeatist conclusions of the notable poet quoted above, tracking one’s outgo (and income) isn't impossible! Indeed, SMI has written about several effective budgeting/cashflow systems. In this article, we highlight a new one: the MoneyWise App.

This recently released digital tool is based on the time-tested “envelope system.” Managing money via envelopes was common when people did the bulk of their spending with cash. Income was divided among a series of envelopes, each earmarked for a particular spending category. Predetermined amounts would go into a Groceries envelope, a Clothing envelope, a Miscellaneous envelope, and so on.

Using envelopes (an alternative version used Mason jars) made it possible to make spending decisions in advance, as the user set aside funds for specific types of expenditures. The system had the further virtue of holding the user accountable to those pre-made decisions. When the funds in a particular envelope (or jar) were all spent, there would be no more spending in that category until the following month!

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Money Roundup: Five Investing Powers, Gold’s Worst Enemy, and More

We'll be posting the April issue of the SMI newsletter tomorrow, so we are rolling out the weekly Money Roundup a day earlier than normal.

Comments? "Join the Discussion" below.

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One Year Ago

One year ago tomorrow — March 23, 2020 — the market's coronavirus crash hit bottom. No one knew it at the time.

Here's an early morning report from the following day, via Value Line:

After closing out their worst week since 2008, stocks were down again Monday, as fear of the economic fallout from the Covid-19 pandemic tightened its grip on the markets.

There was a slight respite early in the day, after the Federal Reserve announced its latest moves to support the economy. These include removing its limits on repurchases of Treasuries and mortgage-backed securities, buying exchange-traded funds (ETFs) that track corporate bonds, and $300 billion in new lending programs to help support the financial markets, businesses, and consumers. However, the boost to the market was short lived....

[T]he Dow Jones Industrials ended the session down 582 points, or 3%, marking a 37% decline from its recent peak.... Most of the major market sectors were firmly in the red, with the heaviest losses coming in utilities (down 5.5%), financials (-4.8%), and industrials (-4.2%). Altogether, declining issues outpaced advancers by a better than three to one margin.

March 24, the same day that worrisome and downbeat report was published, proved to be the best single day for stocks since 1933.

The Dow Industrials took off like a rocket, gaining 11.4%, the S&P 500 surged 9.4%, and the NASDAQ posted an 8.1% gain. The shortest bear market in history was over, and a new bull market was underway — although, again, no one knew it at the time, or at least no one could be sure.

A year later, here's what we do know: The Dow and the S&P are up more than 75% over the past 12 months (through Friday's close), while the NASDAQ is up more than 90%. Not too shabby.

Unpredictable

Wouldn't it be great if we had known then what we know now? Yeah, right. Of course, these things aren't predictable. You can't know in advance.

But you can know that the long-term trend of the market is upward and that bear markets come to an end eventually. And you can invest accordingly.

I'm reminded of something Mark Biller wrote a little while back:

[A] short-term emotional response almost always undermines the long-term appreciation of one’s portfolio.

If your investing time frame is more than five years — which it should be for you to be in the stock market at all — there's a strong likelihood (if history is any guide) that the dollars you invest today will appreciate by the time you need to take them out.

The longer your time frame, the more the odds are in your favor. As the old saying goes, "It's time in the market, not timing of the market, that makes the difference."

Looking ahead

Who knows what tomorrow will bring? Not you, not me, not even the "experts."

But if you do your best to stay "above the fray" of the market's manifold gyrations and stick to your investing plan, you likely will come out ahead.

No, that's not a prediction. It's just a reasonable assessment of a strong probability.

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SMI on the Radio: Why Interest Rates Are on the Increase (audio and transcript)

In the bond market, interest rates have been heading up — and rapidly. How might that affect your fixed-income investments and overall portfolio?

SMI's executive editor Mark Biller offered insights earlier this week on MoneyWise Live from Moody Radio.

To listen, click the play button below. Scroll down for the transcript.

(And for more radio appearances by members of the SMI team, visit our Resources page.)

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Money Roundup: More Stimulus From Uncle Sam, the Simplest Hedge Against Inflation, and More

Before getting to the Roundup, a public service announcement: Daylight Time returns this Sunday. Don't forget to set your clocks ahead (unless you live in Hawaii or Arizona)!

Now on to our weekly collection of interesting articles on investing, personal finance, and stewardship.

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Now Available: Personal Portfolio Tracker & Fund Performance Rankings With Data Through 2-28-21

We've updated SMI's Personal Portfolio Tracker and monthly Fund Performance Rankings with performance data through Feb. 28, 2021.

• The Personal Portfolio Tracker: SMI's fund-performance database tracks the monthly returns of more than 25,000 traditional mutual funds and ETFs. The Tracker can filter that large amount of data and produce a concise report covering only the funds available in your work-based retirement plan, thus making it easier to apply our Fund Upgrading strategy to a 401(k), 403(b), or similar plan.

The SMI newsletter's Upgrading formula for domestic funds now guides users toward either growth or value funds as appropriate, rather than maintaining both growth and value allocations at all times. Accordingly, the newsletter uses only two domestic categories: Large Company and Small Company. 

Tracker portfolios, however, classify holdings according to four domestic stock-fund categories: Large/Growth and Large/Value plus Small/Growth and Small/Value.

This helps members who are using alternatives to our "official" fund recommendations easily gauge (based on the Tracker's percentile-ranking column) how each fund they own is performing relative to its same-category peers. Upgrading calls for selling a fund when it drops below the 25th percentile, so having a clear view of a fund's relative performance is important to maintaining that selling discipline.

Also, unlike the newsletter, Tracker portfolios show a separate Foreign category. In the newsletter, Foreign is a subset of the "Situational" category.

Note: Any fund that doesn't fit within the five categories mentioned above (Large/Growth, Large/Value, Small/Growth, Small/Value, and Foreign) will be displayed by the Tracker in a category labeled "Other Funds."

• Fund Performance Rankings (FPR): The FPR report is a 38-page downloadable PDF file containing performance data and SMI's momentum rankings for more than 1,600 no-load traditional funds and ETFs.

The funds included in the FPR are selected based on asset size, brand familiarity, and brokerage availability.

The Fund Performance Rankings report displays the bulk of domestic stock funds (both traditional funds and ETFs) across these categories: Large/Growth, Large/Value, Small/Growth, Small/Value. Like the Tracker, the FPR also uses the Foreign category. Other FPR categories include Bond funds, Target-Date funds, and Sector funds. 

Check page 2 to learn how to use the FPR report. Page 3 includes an overview of the 70+ risk categories that will help you compare "apples to apples." In response to member requests, we have added hyperlinks to Page 3 to make it easier to jump from that page to specific sections within the rankings. Page 4 of the FPR has explanations of the various data-column headings.

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