October - December 2014 articles archive home
You don't like New Years Eve?
Are you insane? It's literally the best holiday ever. You just party all night and it doesn't matter what stupid stuff you do because the year's over and you get a brand new start in the morning.
Wednesday, December 31, 2014 ... more
How it's done
Matthew Schifrin, the investing editor of Forbes magazine, hunted down 10 of the best-performing amateur investors to find out how they managed to beat the market.
Tuesday, December 30, 2014 ... more
Circle of competence
Every person has a circle of competence. And it’s going to be very hard to advance that circle. So you have to figure out what your own aptitudes are. You have to figure out where you’ve got an edge.
Monday, December 29, 2014 ... more
Santa is the world's richest man. He may not be in the gift giving business for the big bucks, but Santa still needs money to keep his operation rolling. And to pay for the elves' dental plan.
Wednesday, December 24, 2014 ... more
In truth
In truth extreme situations that produce extraordinary wealth are rare. Success is more likely to come from making smart decisions with your time and money.
Tuesday, December 23, 2014 ... more
Worth paying for?
Investment advice you pay for may or may not be better than free counsel. A lot depends on what you’re getting for your money in addition to stock recommendations.
Monday, December 22, 2014 ... more
As we struggle with shopping lists and invitations … it is good to be reminded that there are people in our lives who are worth this aggravation, and people to whom we are worth the same.
Friday, December 19, 2014 ... more
Santa & January
The market often rebounds strongly into the New Year - the so-called Santa Claus rally. No one's sure what causes this rally, but the effect has been significant ... and often extends to the end of January.
Thursday, December 18, 2014 ... more
As with farming
Stock-market history provides an important lesson: You plant your seeds with the expectation that there will be bad crops from time to time, but that the boom years will more than make up for the losses.
Wednesday, December 17, 2014 ... more
Alledged questions
There is another candidate for the position. Should we interview him and decide who is better or would you prefer we make our hiring decision by flipping a coin?

Monday, December 15, 2014 ... more
Who knows?
Isn't it all a question of brain chemistry, signals going back and forth? How do you know if something is really what you want to do or just some nerve impulse in the brain?
Friday, December 12, 2014 ... more
The beauty of the markets is that in the daily ups and downs of prices, we can learn a great deal about ourselves.
Thursday, December 11, 2014 ... more
From hedge to fund
The classic hedge-fund technique, created in 1949 by Alfred Winslow Jones, bet on prices going both up and down in ways that are supposedly certain to produce a positive outcome.
Wednesday, December 10, 2014 ... more
Jakobsen's prediction
Japan may have bought the global markets another quarter or two of protection but the real world will have its say … If the week of mayhem we saw in October is anything to go by, we are in for a rollercoaster ride in 2015.
Tuesday, December 9, 2014 ... more
Outlandish predictions
Not only do economic, financial and political predictors miss the big surprises, but they are quite ashamed to say anything outlandish to their clients—and yet events, it turns out, are almost always outlandish.
Tuesday, December 9, 2014 ... more
The scientific method ...
people tend to believe in “the law of small numbers”; that is, they tend to generalize from small amounts of data. So, if the first four tosses of a coin give, say, three heads, many people will start to believe that the next toss is likely to be tails.
Friday, December 5, 2014 ... more
Black Friday
Long before it referred to consumers storming through shopping malls “Black Friday” referred to a dire day in the financial markets when Jay Gould tried to corner the gold market and failed.
Thursday, December 4, 2014 ... more
Shrinking alpha
In some competitions such as chess, poker and investing, it’s the relative level of skill that plays the more important role in determining outcomes, not the absolute level.
Wednesday, December 3, 2014 ... more
We don’t know what lies ahead in terms of the macro future. Few people if any know more than the consensus about what’s going to happen to the economy, interest rates and market aggregates.
Tuesday, December 2, 2014 ... more
Back to where we were
Because so many influential factors are so unusual, investors are struggling to determine if stocks are still cheap or at least reasonably priced, or extremely expensive.
Tuesday, December 2, 2014 ... more
Each of us possesses certain foundational beliefs—narratives about the self, ideas about the social order—that essentially cannot be violated: To contradict them would call into question our very self-worth.
Friday, November 28, 2014 ... more
End of an epoch
There is not a Bond King or a Stock King or an Investor Sovereign alive that can claim title to a throne. All of us have cut our teeth during perhaps a most advantageous period of time that an investor could experience.
Thursday, November 27, 2014 ... more
About time
Want to know how to win most arguments about market performance? Change the time horizon to suit your stance. Take gold for instance. There’s ammunition for both sides of the gold trade to use to their advantage.
Wednesday, November 26, 2014 ... more
Dumb things, lesson learnt & a quiz
Morgan Housel says he has a front-row seat to the downside of financial journalism: gibberish, nonsense, garbage, and drivel ... China’s central bank cut its benchmark interest rates on Friday, as policy makers tried to counter a deepening slowdown ... FT Alphaville hosted a night of drinks and trivia in New York on Wednesday last week.
Tuesday, November 25, 2014 ... more
Talking about China
A: Warren, why are you getting up again? You've told me a million times that you can't make money overnight."
W: "I have a hunch things may be a little different today. The centrals are all going to follow Japan and bull things up.
Tuesday, November 25, 2014 ... more
A certain type of humility
You can't do the big things in this world unless you have the sort of humility that makes a fellow proud of a chance to work George Lorimer tells us in his Letters From A Merchant to his Son.
Friday, November 21, 2014 ... more
Hedge funds' moneyball
Asset management’s most strident critics have long suggested that even the likes of Warren Buffett are simply lucky. Stan Altshuller, co-founder of New York-based analytics firm Novus, believes they may be wrong.
Thursday, November 20, 2014 ... more
Things to avoid
From Morgan Housel at The Motley Fool, things to avoid at all cost:

Feelings of certainty. They invariably come just before a big surprise.
Wednesday, November 19, 2014 ... more
Sell-side analysts
"Sell-side" analysts produce research that's purchased by their firms' clients. They're the group that's often cited in stories about "Wall Street analysts."
Tuesday, November 18, 2014 ... more
When there's fear everywhere
The potential loss of money brings out the fear and irrationality that we might otherwise keep hidden in polite society. Investing isn’t just a test of strategy – it’s a test of character.
Tuesday, November 18, 2014 ... more
American author William Feather once wrote that being educated means “being able to differentiate between what you know and what you don’t.” As it turns out, this simple ideal is extremely hard to achieve.
Friday, November 14, 2014 ... more
Coop on gold
Michael Coop, Head of Multi Asset Strategies at Morningstar, says there are three things investors need to remember about gold.
Thursday, November 13, 2014 ... more
None so old
If you ever take a trip to an investment bank’s trading floor, look around. Try to find the number of traders over forty. You won’t find many.
Wednesday, November 12, 2014 ... more
True or false?
The main article in The Economist in March 1999 was famously titled, "Cheap Oil: The next shock?"

Something more complex than supply and demand determines stock prices.

Besides bulls and bears there are lame ducks in the market.
Tuesday, November 11, 2014 ... more
Dropped out? Not a problem.
As a general rule, people who receive minimal education are headed towards a long, torturous career. But then there are exceptions.
Tuesday, November 11, 2014 ... more
Career advice
When companies are growing quickly and having a lot of impact, careers take care of themselves. And when companies aren’t growing quickly or their missions don’t matter as much, that’s when stagnation and politics come in.
Friday, November 7, 2014 ... more
Reasons to hate
They don’t let the folks in the Disneyland character costumes walk around with their heads off. It would end your childhood right then and there …
Thursday, November 6, 2014 ... more
They are important to identify because they do damage to your psyche and your portfolio. So let us point to things that make them easier to recognize.
Wednesday, November 5, 2014 ... more
Why do we assume we are less likely to make mistakes than other investors? Too many investors are confident, for instance, that they will be greedy when others are fearful. Few assume they will be the fearful ones.
Tuesday, November 4, 2014 ... more
Questions & answers
Questions that reveal tendencies that are dangerous to long-term investing: Why would you abandon a sensible investment strategy to buy into a hot story? Why would you put too much money in one investment? Why would you buy what did well last year or even last week?
Tuesday, November 4, 2014 ... more
Except for regret
Suppose you have to choose between a lifetime income of $1,000,000 or a risky bet, which will give you a lifetime income of $100,000,000 with 10% probability, or $200,000 with 90% probability.
Friday, October 31, 2014 ... more
Easily swayed
"Corporations are people" said Mitt Romney. He is shown to be right in two recent papers from Christopher Parsons and colleagues.
Thursday, October 30, 2014 ... more
Like a horror movie
In a contribution to Daily Speculations Leo Jia says he was reading about the 10 things that make horror movies scary when he started thinking about how they relate to trading.
Wednesday, October 29, 2014 ... more
How much longer?
Since the low in the global equity market in March 2009, the MSCI World index has risen roughly 180% in total return terms, generating an annualised return of a remarkable 20%. Last year was one of the strongest years on record for equity markets.
Tuesday, October 28, 2014 ... more
The right mind-set
Most new traders think the secret to success is in possessing the right tools, in the belief that these can help them to consistently predict price action, whereas most successful traders tend to focus on developing the right mind-set.
Tuesday, October 28, 2014 ... more
What often vexes in the language of money is something called “reversification” — a process by which words take on a meaning that is the opposite of, or at least very different from, their initial sense.
Friday, October 24, 2014 ... more
We’re talking retail forex trading here — through legitimate, authorised forex trading houses, not fraudsters.
Thursday, October 23, 2014 ... more
Wiswell's advice
Thomas Wiswell produced a number of ‘one-liners’ intended for chess players that could just as easily have been written for the markets.
Wednesday, October 22, 2014 ... more
First-hand thinking
Jiddu Krishnamurti spent his life urging others to investigate things for themselves rather than rely on experts. That applies to investors too.
Tuesday, October 21, 2014 ... more
Experts: Best avoided
Last week was an interesting week in the markets, which brought out the 'experts' with their usual prognosis for the future.
Tuesday, October 21, 2014 ... more
Disagree with someone on the right and he is likely to think you obtuse, wrong, sentimental, foolish; disagree with someone on the left and he is more likely to think you selfish, cold-hearted, evil.
Friday, October 17, 2014 ... more
Spending less
The main ways to build wealth are to earn more, spend less, or do both. Earning more is always good, but it actually has a far lower impact on years of financial freedom than spending less
Thursday, October 16, 2014 ... more
.. The beginning of the crash struck them not as a sign of financial doom, but as an opportunity for bargains. Now ... ... the current period of optimism has made forecasters aggressively positive on stocks and the economy.
Wednesday, October 15, 2014 ... more
Getting scared out
In a weekend article in the Washington Post Barry Ritholtz, asks: What if you were the world’s greatest stock picker? Can you imagine how much wealth you could create?
Tuesday, October 14, 2014 ... more
It ain’t easy
Most markets are down from recent highs, but only a tad and probably not enough to silence those who think that investors have again fallen prey to “irrational exuberance”.
Tuesday, October 14, 2014 ... more
John & Jane
John and Jane seem to be sliding ever deeper into debt and don’t quite know what to do about it.
Friday, October 10, 2014 ... more
Analysts' priorities
Sell-side analysts aren't primarily interested in making accurate stock picks and earnings forecasts.
Thursday, October 9, 2014 ... more
Where to for gold?
Jim Rogers predicted gold would fall to $1200 in 2011 and that it could go as low as $900. In a subsequent interview with Business Insider he explained how he got to those numbers.
Wednesday, October 8, 2014 ... more
Bill Gross
Bill Gross caused a stir in global stock and bond markets last month when he left Pimco, ahead of what he called “an imminent palace coup,” to join rival firm Janus Capital.
Tuesday, October 7, 2014 ... more
The New Neutral
PIMCO’s New Normal has morphed into “The New Neutral” - a central bank policy rate that is just right. Not too restrictive, not too stimulative, but close to zero.
Tuesday, October 7, 2014 ... more
The business of getting married
It's not the concept of marriage I have a problem with. I'd like to get married too. Maybe a couple of times. It's the actual wedding that pisses me off. - Chelsea Handler
Friday, October 3, 2014 ... more
A cautionary tale
Never underestimate the willingness of people to believe in the most outlandish of things if it suits them. That applies to the world of investing.
Thursday, October 2, 2014 ... more
Sales & marketing
That’s what they do; they sell you on the services their firms offer. They put you into one-size-fits-all “programs” …
Wednesday, October 1, 2014 ... more
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