October - December 2016 articles archive home
"Grande profundum est ipse homo," said Augustine of Hippo. "A human being is a vast oceanic depth" — and just as fearfully and mightily unpredictable. Augustine lived on the Mediterranean's southern shore and feared its rages
Friday, December 30, 2016 ... more
To be happy
Research shows your mood in the morning affects your mood for the rest of the day. “We saw that employees could get into these negative spirals where they started the day in a bad mood and just got worse over the course of the day,” says Steffanie Wilk
Thursday, December 29, 2016 ... more
No man is an island entire of itself wrote John Donne almost 400 years ago and his words are as true now as they were then. I believe they will be just as true in the future, and apply to scientific discovery as well as to philosophy
Wednesday, December 28, 2016 ... more
The conservative banker is an impressive specimen, diffusing the healthy glow which comes of moderation in eating, living, and thinking. He sits in state and spends his days saying, with varying inflections and varying contexts, 'no.'
Tuesday, December 27, 2016 ... more
I never believed in Santa. None of us kids did. Mom and Dad didn't let us. They couldn’t afford expensive presents and didn’t want us to think we weren’t as good as other kids who were supposedly left all sorts of fancy toys by Santa
Friday, December 23, 2016 ... more
In a 17th and 18th Century when monarchs ruled with a heavy fist, pirates operated under an innovative system of equality, bound by written constitutions. That a group of criminals, who stole for profit, followed a system of equality may be surprising
Thursday, December 22, 2016 ... more
Many people who interview applicants for jobs think that they are good at picking the "right" applicant; that they know how to pick appropriate employees based not just the content of the applicant's answers, but also on his or her nonverbal behaviour
Wednesday, December 21, 2016 ... more
10x Rule
From The 10X Rule by Grant Cardone: Tackle every project like your life depends on it, and over time, you must succeed. It's said that you are the sum of the five people who are closest to you, so surround yourself with exceptional thinkers and doers
Tuesday, December 20, 2016 ... more
Problem's behavioural
The common advice is don’t invest until you’ve paid off all your debt. Paying down debt should be your only priority. Until you’re debt-free, investing and saving can wait. It makes intuitive sense. The problem is a behavioural one.
Monday, December 19, 2016 ... more
Sarah Callender admits that, despite the sun finally doing its job, in spite of getting to exercise a bit more, in spite of a more relaxed schedule, in spite of the opportunity to take a break from packing school lunches, summer ends with her feeling "BLAH"
Thursday, December 15, 2016 ... more
Spectacularly wrong
From MarketWatch.com three of the worst markets calls so far in this century: Goldman Sach's call for oil at $200-a-barrel; Marc Faber's near worthless US dollar and gold at $5,000 an ounce; and Alan Greenspan's no housing crisis
Wednesday, December 14, 2016 ... more
Credit card debt
There are few, if any, absolute rules in saving and investing, but here’s ours: Never, never, never take on credit card debt. This rule comes as close as any to being an inviolable commandment. Scott Adams calls it the crack cocaine of the financial world.
Tuesday, December 13, 2016 ... more
When queuing
As we head towards the holidays more serious concerns than the run-o-the-mill investment matters invariably come to the fore. Such as how to deal with the long lines that customarily form at the checkout counters.
Tuesday, December 13, 2016 ... more
Good Business
Ben Franklin once said, "I’m not moral because it’s the right thing to do, but because it’s the best policy." A market economy can only be sustained by certain standards, like trust, honesty, and fairness. It s wrong to deceive people — and it’s bad business
Monday, December 12, 2016 ... more
From George Lorimer in Letters from a Self-Made Merchant to his Son: Appearances are deceitful, I know, but so long as they are, there's nothing like having them deceive for us instead of against us. I've seen a ten-cent shave get a thousand-dollar job
Friday, December 9, 2016 ... more
In an interview with Jessica Gross at Longreads Dan Ariely explained why money alone won't improve performance when it's based on the naïve notion that somehow things will magically become better. Can they actually work harder, is it possible?
Thursday, December 8, 2016 ... more
If you don't take a hard look at risk, it will take you. When I was a kid and got my first motorcycle, I had an older friend who told me, "Larry, when you are on a motorcycle, never argue with a car. You will lose." The same applies to trading
Wednesday, December 7, 2016 ... more
In a letter to Oaktree Capital clients Howard Marks listed a number of time-honoured investment maxims that he then went on to argue were “time-honoured bromides” that ranged from (a) only effective part of the time to (b) just plain wrong.
Tuesday, December 6, 2016 ... more
Will understanding the science of economics make you a better investor? A quick look at the anecdotal evidence suggests not. Friedrich Hayek invested the money the Nebel Committee gave him in the stock market and lost it all
Tuesday, December 6, 2016 ... more
Faulty thinking
Ten common patterns of faulty thinking provided by Dr. David Burns, author of Feeling Good and pioneer of Cognitive Behavioural Therapy: (1) All-or-Nothing Thinking: Failing to recognize that there may be some middle ground.
Monday, December 5, 2016 ... more
Why haven’t we made contact with extra-terrestrials yet? We’ve been scanning the heavens for evidence of alien life for decades now and still haven’t detected any signs of their existence. David Christian at Macquarie University might have the answer
Friday, December 2, 2016 ... more
Market switch
According to Bloomberg strategists are coming around to the idea that Japan is the place to be in 2017, with Morgan Stanley the latest to embrace one of the year’s biggest comeback stories at the expense of America’s aging bull market.
Thursday, December 1, 2016 ... more
Earlier this month Warren Buffett met with MBA/MS and undergraduate students from eight American universities/colleges. Amongst the questions: What is the most important skill in finance? Buffett's answer: salesmanship.
Wednesday, November 30, 2016 ... more
Tread carefully with current investment methods. Our limitations in processing complex information correctly prevent their successful use by most of us, says David Dreman. Besides the fact that none can be consistently relied on
Tuesday, November 29, 2016 ... more
Like the NY Subway
Hany Saad wrote a piece at Daily Speculations in which he compared travelling on the New York subway with trading the market. Knowing that the previous two stops to mine have only two sets of stairs closer to the front of the train,” he began
Tuesday, November 29, 2016 ... more
I think you really should make a radical change in your lifestyle and begin to do things which you may have been too hesitant to attempt. So many people live with unhappy circumstances but will not take the initiative to change their situation
Monday, November 28, 2016 ... more
Look again at that dot. That's here. That's home. That's us. On it everyone you love, everyone you know, everyone you ever heard of, every human being who ever was, lived out their lives. The aggregate of our joy and suffering
Friday, November 25, 2016 ... more
Smarty pants
Average people can often learn faster than the super-intelligent, because the super-intelligent try to cram the real world into the theories they’ve been taught, while average folks are better at accepting the real world at face value.
Thursday, November 24, 2016 ... more
Warren Buffett says there are lessons to be learnt from two small investments he made some time ago. The first is a 40-acre farm bought for less than what a bank had lent on it. The other was a New York retail property next to New York University
Wednesday, November 23, 2016 ... more
Richard Driehaus points to a few investment paradigms that might be best avoided. As he explains: “Paradigms are beliefs that most people have. Unfortunately, they are often outdated and no longer true, yet people tend to hold on to them.
Tuesday, November 22, 2016 ... more
Starter home
I think buying a starter home is one of the worst moves you can make financially, says Ben Carlson. Buying a starter home will likely cost you way more money in the end as opposed to waiting until you’re ready for a more high quality home
Tuesday, November 22, 2016 ... more
Drew Houston
Drew Houston, the co-founder of Dropbox, says if he had to start all over again there wouldn't be a lot on his cheat sheet - "the one I would have loved to have had on my graduation day" - there would be a tennis ball, a circle, and the number 30,000
Monday, November 21, 2016 ... more
Friendly robot
To see where thinking machines are headed we need to look into the unforgiving mirror the internet holds up to our nature. Like the processed foods on grocery store shelves, Internet content is a product of selection for whatever sells
Friday, November 18, 2016 ... more
Not true
From Ben Carlson at A Wealth Common Sense assumptions that just aren’t true: 200 page reports are a good idea. Charlie Munger says, “Any time anybody offers you anything with a big commission and a 200 page prospectus, don’t buy it
Thursday, November 17, 2016 ... more
Expectations vs. Forecasts
It's one thing to look at history and see that recessions and bear markets have occurred with some frequency, it’s quite another to predict the precise timing of either event. And it's another thing entirely to devise a strategy that reacts to those predictions
Wednesday, November 16, 2016 ... more
Not alone
...most of us grow up either hiding in a shell or learning how to manipulate others in self-defence. Acting independently does not feel natural to us,” says Mark Douglas in The Disciplined Trader, “but that is the only way to succeed in the market.”
Tuesday, November 15, 2016 ... more
And Then What?
And then what? are three words that Charlie Munger claims have regularly kept both he and his partner (Warren Buffett) from seemingly good-sounding investments that subsequently fail to reward. “The simplest way in which to stay clear
Tuesday, November 15, 2016 ... more
Gimmick economy
I have been reluctantly forced to the conclusion that if technology had killed capitalism, economic news would be indistinguishable from today’s feed. We should expect that because there is as yet no known alternative to market capitalism
Monday, November 14, 2016 ... more
Experts are clever people. They know about things that most people don’t understand. Experts become clever by doing ‘research’. When we aren’t sure about something, experts are there to guide us. We must listen to experts
Friday, November 11, 2016 ... more
Until your last breath, there are lots of surprises waiting for you, and, sometimes, at those points you can't do anything, just wait, watch and react like a helpless kid. After the last breath also, you don't know, there may be even more surprises
Thursday, November 10, 2016 ... more
Don't panic
In the hours after the president is elected, equity investors need to brace for volatility. What they shouldn’t do is panic. That’s because regardless of how prices react on Nov. 9, next-day moves in the S&P 500 Index are useless in telling what comes after
Wednesday, November 9, 2016 ... more
Both work
Buying based on fundamentals seems more reasonable than examining recent price charts. The technical analyst is assumed to have a simpler job because one can reasonably argue that a history of prices is a limited and simplistic signal
Tuesday, November 8, 2016 ... more
Ever wonder what makes different people adopt different investment strategies? Why otherwise smart people would choose to follow an investment strategy that seems nonsensical to you? As Aswath Damodaran explains in his book
Tuesday, November 8, 2016 ... more
Who knows?
The political waves sweeping across the democracies of the world have been a costly shock to many professional pundits, politicians and investors. Not only have they been finding themselves on the losing side of the vote
Monday, November 7, 2016 ... more
… and here again is where we ask ourselves, as we have asked our parents and our teachers, questions about integrity, trust, and respect. Those three words mean different things to all of us. Some of the things they can mean, for instance
Friday, November 4, 2016 ... more
Philip Carret started one of the world’s first mutual funds and his investment career spanned eight decades, encompassing dozens of cycles of bull and bear markets.While he built his reputation as a long-term value investor Carret also
Thursday, November 3, 2016 ... more
The odds
In all games the difference between the amateur and the professional is that the professional plays the odds, while the amateur, whether he realizes it or not, is among other things a thrill seeker. Investment, too, is part science and part game
Wednesday, November 2, 2016 ... more
James Montier was asked in an interview with Money Week what investors needed to know before making an investment decision. “Wall Street would have you believe that you need to know everything about everything before you make an investment,” he replied. “But in fact, to make an investment, what I need to know is relatively limited. I simply don't need to know everything about everything.
Tuesday, November 1, 2016 ... more
In order to be a good investor, you must actually read. You must read more than Facebook posts, Twitter feeds, and the front-page bullet points of The Wall Street Journal. You cannot be a good investor if you rely on watching CNBC and listening to a few pundits
Tuesday, November 1, 2016 ... more
Most businessman imagine that they are in business to make money, and that this is their chief reason to be in business, but more often than not they are gently kidding themselves. There are so many other things which are actually more attractive.
Monday, October 31, 2016 ... more
More advice
Treat everyone you meet as if you have secret information that they are about to become extremely rich. Never tell a lie but never tell the whole truth, and never miss an opportunity to go to the lavatory. Everything matters, but nothing matters that much.
Friday, October 28, 2016 ... more
Generally - but not always - a real sleuth of an analyst who doesn't have to spend time answering his own phone, talking to customers, selling stock to pension funds, and attending meetings, can crack an income statement and balance sheet in a couple of days.
Thursday, October 27, 2016 ... more
If you don't take a hard look at risk, it will take you. When I got my first motorcycle, I had an older friend who said to me, "Larry, when you are on a motorcycle, never argue with a car. You will lose." The same thing applies to trading
Wednesday, October 26, 2016 ... more
After 50 years
In his latest book, The Index Revolution: Why Investors Should Join It Now released this month, Ellis explains how over the span of fifty years he came to believe that the market “can’t be beaten.” It’s essential reading for anyone who still thinks otherwise
Tuesday, October 25, 2016 ... more
Better still
An active manager must overcome the drag of about 3.25 percent in annual operating costs. If the fund manager is only to match the market’s historical 9 percent return, he or she must return 12.25 percent before all those costs
Tuesday, October 25, 2016 ... more
A stock is for all practical purposes, a piece of paper that sits in a bank vault. Most likely you will never see it. It may or may not have an Intrinsic Value; what it is worth on any given day depends on the confluence of buyers and sellers that day
Monday, October 24, 2016 ... more
Humanity is a biological species, living in a biological environment, because like all species, we are exquisitely adapted in everything: from our behaviour, to our genetics, to our physiology, to that particular environment in which we live. The earth is our home.
Friday, October 21, 2016 ... more
Stocks vs socks
Imagine that the price of the average stock declined 50% in one year. I can think of three ways to describe this: 1. Stocks on sale! 50% off, first come first served! (positive). 2 Average stock prices 50% lower than last year. (neutral). 3. Stock market crashes! Stocks loose half their value! (negative).
Thursday, October 20, 2016 ... more
The money game
If the profit numbers on income statements are treated with such reverence, it was obviously only a question of time before some smart fellows would start building companies not around the logical progression of a business but around what would beef up the numbers
Wednesday, October 19, 2016 ... more
Starting over
If I wanted to become a tramp, I would seek advice from the most successful tramp I could find. If I wanted to become a failure, I would seek advice from men who had never succeeded. If I wanted to succeed in all things, I would look around me for those who are succeeding and do as they have done.   —  Joseph Marshall Wade
Tuesday, October 18, 2016 ... more
What are some of the biggest fallacies people have about the markets? Jim Rogers: That the market is always right. The market is nearly always wrong. Blair Hull: They're interested in who's buying or selling. They think that type of information is important; yet it rarely means anything. Paul Tudor-Jones: That the markets can be manipulated.
Tuesday, October 18, 2016 ... more
Patriotism is the willingness to kill and be killed for trivial reasons.     -   Bertrand Russell
He who joyfully marches to music rank and file has already earned my contempt. He has been given a large brain by mistake, since for him the spinal cord would surely suffice.     -   Albert Einstein
Monday, October 17, 2016 ... more
Perhaps you know some well-off families who do not seem to suffer from their riches. They do not overeat themselves; they find occupations to keep themselves in health; they do not worry about their position; they put their money into safe investments and are content with a low rate of interest; and they bring up their children to live simply and do useful work.
Friday, October 14, 2016 ... more
From The Wisdom of Great Investors by Davis Advisors: Avoid Self-Destructive Investor Behaviour. Chasing the hot-performing investment category or making major tweaks to your long-term investment plan can sabotage your ability to build wealth.
Thursday, October 13, 2016 ... more
Pundit or professional?
Pundit (noun): A supposed expert in a particular field who is frequently called on to give opinions to the public. Professional (noun): A person competent or skilled in a particular activity. Pundit or Professional? The choice is yours.
Wednesday, October 12, 2016 ... more
The sentiment game
What Keynes called the Newspaper Beauty Contest is known to modern game theory as a variant of the Common Knowledge (CK) game. To illustrate how this game is played on a fundamental level, I’ll use another classic example: The Island of the Green-Eyed Tribe.
Tuesday, October 11, 2016 ... more
The history of the stock market is full of events striking enough to earn their own names: the Great Crash of 1929, the ’Tronics Boom of the early 1960s, the Go-Go Years of the late 1960s, the Nifty Fifty bubble of the early 1970s, the Black Monday crash of October 1987, and the Internet or Dot.com bubble of the 1990s.
Tuesday, October 11, 2016 ... more
Wall Street
To outsiders, Wall Street is a manic, dangerous and ridiculous republic unto itself – a sort of bizarro world where nothing adds up and common sense is virtually inapplicable. Consider the following insane things that we believe on Wall Street, that make no sense whatsoever in the real world
Monday, October 10, 2016 ... more
Sicence as philosophy
Science is not the observation of rare and hidden phenomena that can be produced only by experiments, but the study of those that are obvious and accessible to everyone, which will lead to the discovery of the most important truths. Therefore the problem is not so much that
Friday, October 7, 2016 ... more
This much I know, Daniel Kahneman, tells The Guardian: We cannot comprehend very large or very small numbers. It would be useful for us to acknowledge that fact; There is a powerful idea that we should want to be richer. I went to a financial advisor in the States
Thursday, October 6, 2016 ... more
Weakest link
In his podcast, Revisionist History, Malcolm Gladwell introduces the concept of "weak link" problems. Essentially, these are problems best solved by shoring up the weakest link, not by making the strongest link stronger. Statistics show, for example, that if a soccer club can upgrade their weakest players, not their superstars, they score more goals and win more games—a lot more games.
Wednesday, October 5, 2016 ... more
Mr Market
"... Every day he tells you what he thinks your interest is worth … Sometimes his idea of value appears plausible and justified by business developments and prospects as you know them. Often, on the other hand, Mr. Market lets his enthusiasm or his fears run away with him, and the value he proposes seems to you a little short of silly."
Tuesday, October 4, 2016 ... more
Market persona
Most of us are familiar by now with Benjamin Graham’s analogy of the market as a manic-depressive business partner whose estimate of the business's value goes from very pessimistic to wildly optimistic. Much like Warren Buffett’s moody farming neighbour who yells out a price every day at which he is willing to either buy Buffett’s farm or sell him his.
Tuesday, October 4, 2016 ... more
Not politicians
How do individuals make choices: Would you like better grades? More time to relax? More time watching movies? Getting better grades probably requires more time studying, and perhaps less relaxation and entertainment. Not only must we make choices as individuals, we must make choices as a society. Do we want a cleaner environment? Faster economic growth?
Monday, October 3, 2016 ... more
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