July - September 2017 articles archive home
Easy out
It is remarkable how many of the problems we face in investing, financial planning and in life generally are attributable to our willingness, eagerness even, to think we have “got a good reason for taking the easy way out. We pick what is expedient
Friday, September 29, 2017 ... more
Our call that inflation is on the way is the irresistible conclusion which one must draw; in the world that is passing, it was asset prices that went up; in the world that is coming, it will be wages and retail prices that go up. The credit crunch of 2008
Thursday, September 28, 2017 ... more
When to hold
Stocks rarely perform in the time frame we expect, it’s why the market tends to only work for investors that have a long-term portfolio focus. But how do you know when you’re right as opposed to just being stubborn? Sustainable multi-baggers
Wednesday, September 27, 2017 ... more
6 Options
In the low-return world I described in the memo, the options are limited: 1. Invest as you always have and expect your historic returns. 2. Invest as you always have and settle for today’s low returns. 3. Reduce risk to prepare for a correction
Tuesday, September 26, 2017 ... more
Market insights from the Wells Fargo Investment Institute Global Investment Strategy team – September 18, 2017: Gradually rising, but benign inflation should produce small interest-rate increases, while we expect moderate global
Tuesday, September 26, 2017 ... more
In many areas of life, the truth doesn’t impose consequences on those who go against it. Examples include: politics, media, sales, entertainment, law, religion, and so on. In these areas, appearances tend to be more important than reality.
Friday, September 22, 2017 ... more
Small caps
Our strategy from the beginning has been to focus on areas where we believe we can have some advantage, where there is a greater prevalence of irrationality and higher likelihood of mispriced assets. - James Vanasek.
Thursday, September 21, 2017 ... more
Fintech - Revolution or Hype? Asks Edward Robinson at Bloomberg QuickTake: “Some bankers scoffed when Fintech upstarts promised to reinvent their business. Now they’re joining the revolution. About half plan to acquire Fintech firms
Wednesday, September 20, 2017 ... more
Don't just read
A single conversation across the table with a wise man is better than ten years mere study of books, said Henry Wadsworth Longfellow. Can that be true? Can a single conversation about investing be better than ten years of reading on the subject?
Tuesday, September 19, 2017 ... more
Even though he was once an executive at Facebook, Chamath Palihapitiya, CEO of Social Capital Hedosophia Holdings, favours investing in Amazon instead, he told CNBC's Fast Money: Halftime Report. Palihapitiya says he thinks
Tuesday, September 19, 2017 ... more
Not so positive
Pop psychology and the self-help industry reinforce a widespread belief that positive thinking can improve our moods and lead to beneficial life changes. But research in psychology suggests that indulging in undirected positive flights of fancy
Friday, September 15, 2017 ... more
what now?
In this new era where indexing is already such a powerful force, what is our role as investment professionals in financial analysis, stock selection, and helping clients implement their investment programs? We have moved a long way
Thursday, September 14, 2017 ... more
Marks' latest
The amount you have invested, your allocation of capital among the various possibilities, and the riskiness of the things you own all should be calibrated along a continuum that runs from aggressive to defensive. What matters is
Wednesday, September 13, 2017 ... more
Dow 20,0000
In the abstract to the paper he published earlier this year, Narrative Economics, Nobel Prize-winning economist Robert Shiller points out that we have always been highly tuned towards narratives, whether factual or not, to justify ongoing actions
Tuesday, September 12, 2017 ... more
Market mistrust
The CAPE ratio is just one indicator … Since 1989 I’ve been doing questionnaire surveys of both individual and institutional investors … I believe in it, somewhat, though I don’t think it answers everything. I have something
Tuesday, September 12, 2017 ... more
What if our faith in nature’s knowability is just an illusion, a trick of the overconfident human mind? That’s the working assumption behind a school of thought known as mysterianism. The mysterians propose that human intellect has boundaries
Friday, September 8, 2017 ... more
I have strong opinions about gold,” he says, “so I was excited to hear from other people in the room. There were three other advisors, each on teams that manage over a billion dollars and twenty years in the business. Two of the three
Thursday, September 7, 2017 ... more
Up & down
Since 1926, if you were to take the daily performance of the S&P 500 and break it down into gains and losses, the numbers show that it’s basically a coin flip between up and down days, with 54% showing positive performance and 46% negative returns
Wednesday, September 6, 2017 ... more
Advise & timing
Guru investors can have the effect of artificially running prices up or down to the indirect benefit of the few. Regarding the broader market, the artificial nature of this impact means that the accuracy of gurus' advice – the gains that are initially on offer
Tuesday, September 5, 2017 ... more
Duration mismatch
One of the biggest problems with “buy and hold” investment advice is the “duration mismatch.” The issue that arises is individuals do not necessarily have the “time” to achieve the long-term average returns of the market. Most have been led to believe
Tuesday, September 5, 2017 ... more
Wiswell's wisdom
Walking in Central Park one sunny day, carrying his toddler on the shoulders, Victor Niederhoffer spotted a man playing checkers under the trees. The meeting that ensued resulted in one of the most remarkable collections of proverbs ever assembled.
Friday, September 1, 2017 ... more
Emotions rule
Financial markets are populated by human investors burdened with emotional baggage and associated cognitive errors. In a market context, these errors are amplified because, in the aggregate, they create herding, which leads to wild swings
Thursday, August 31, 2017 ... more
One liners
From Stefan Cheplick: Story stocks are the most fun, but also the most dangerous. You need to develop your own method for screening and searching for stocks
Wednesday, August 30, 2017 ... more
Need to know
Although we exhibit lots of individual and cultural variations, humans are animals, and like all animals we have idiosyncrasies, quirks and characteristics that distinguish us as a species. Anthropologists have identified many “human universals”
Tuesday, August 29, 2017 ... more
Ponzi schemes
People continue to be lured into Ponzi schemes. There’s better information available to everyone today than ever before. And yet Ponzi schemes continue to thrive. Why? The reason is simple: They thrive on human nature. Ponzi schemes, at least in some form
Tuesday, August 29, 2017 ... more
Future self
Considering your future self to be an entirely different person could have serious consequences. People who regard the future self as distinct should logically have no more reason to care about that future self. They should have no reason to save money, maintain
Friday, August 25, 2017 ... more
Ben Carlson at A Wealth of Common Sense has published a list of clichés that he’s found are regularly used in fund promos that “don’t tell you anything besides what you want to hear.” Here are a few along with what Carlson calls his translations
Thursday, August 24, 2017 ... more
Lotto stocks
Lottery stocks entice investors because they represent new technologies and innovations that have the potential to lead to massive success if their new car/energy/medical technologies pan out. The chance, however small
Wednesday, August 23, 2017 ... more
Mark Twain once famously quipped “buy land, they’re not making it anymore” in the general belief that houses rarely lose money. But analysis shows that house prices can fall for prolonged periods, and that we tend to under-estimate
Tuesday, August 22, 2017 ... more
Pride & regret
In an article titled Caveman Investment Concepts, Kenneth Fisher argues that the markets rather than being driven by fear and greed, are driven by a desire to accumulate pride and shun regret. “Accumulating pride and shunning regret
Tuesday, August 22, 2017 ... more
High road
Ben Franklin 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
Friday, August 18, 2017 ... more
FoMO or fear of missing out is a pervasive apprehension that others might be having rewarding experiences from which one is absent. This social angst is characterized by a desire to stay continually connected with what others are doing. – Wikipedia
Thursday, August 17, 2017 ... more
In 1703 the mathematician Gottfried von Leibniz told the scientist Jacob Bernoulli that nature does work in patterns, but “only for the most part.” The other part, the unpredictable part, tends to be where things matter the most
Wednesday, August 16, 2017 ... more
Thematic investing
Investors are constantly looking for new and promising ideas in order to capitalize on themes that will drive tomorrow’s markets. Their search is popularising thematic strategies. The idea is not entirely new, some investors have been deploying thematic strategies for years in an attempt to generate superior returns, and evolve traditional index investing.
Tuesday, August 15, 2017 ... more
Alternative approach
The financial crisis may seem like it’s now in the rear-view mirror, but we haven’t learned some of its most important lessons. Among those is a largely unacknowledged one: the failure of our primary risk management methodology
Tuesday, August 15, 2017 ... more
From Tania Lombrozo Associate Professor of Psychology, UC Berkeley: At the heart of scientific thinking is the systematic evaluation of alternative possibilities. The idea is so basic that it’s woven into the practice of science itself
Friday, August 11, 2017 ... more
Can't tell
In his book, The Guru Investor, John Reese writes that, “Every day on Wall Street, something happens that makes people think they should invest more money in the stock market, or, conversely, makes them pull money out of the market.
Thursday, August 10, 2017 ... more
Warren Buffett is often quoted as saying "be fearful when others are greedy”. Warning us to be careful of high-flying assets coming crashing down. It begs the question: are ‘others’ being greedy now? With the Dow breaking through 22,000
Tuesday, August 8, 2017 ... more
In investing, what is comfortable is rarely what is profitable - Robert Arnott What's that I hear? The return on those investments is lousy? You're right. But you said you wanted a safe investment.
Tuesday, August 8, 2017 ... more
Trying too hard
When you try to stay on the surface of the water, you sink; but when you try to sink, you float. - Alan Watts It’s only relatively recently that [we] have begun to think of happiness as an entitlement
Friday, August 4, 2017 ... more
Dalio: In 2017
From Ray Dalio: 4 things that are noteworthy, 3 things that drive economies, what raises living standards over the long term plus comments on liquidity, the US debt levels and the US, Japanese and Chinese and European economies.
Thursday, August 3, 2017 ... more
Jim Rogers on ..
The next time we have an economic problem in the U.S.—and therefore the world—it’s going to be the worst of our lifetime given what’s been going on. The world has been printing a lot of money and the whole world has a lot of debt.
Wednesday, August 2, 2017 ... more
Investment advice
The problem with trading and investing advice, what often renders it useless, is that while it might apply to one situation it seldom applies to another. It then becomes the wrong advice. This applies to the best advice from the best sources
Tuesday, August 1, 2017 ... more
Hope & fear
One basic market truth (or, perhaps more accurately, one basic truth about human nature) is that you can’t win if you have to win. The market is a stern master that seldom tolerates the carelessness associated with trades born of desperation
Tuesday, August 1, 2017 ... more
Ayn Rand
[If] you say that money is made by the strong at the expense of the weak, what strength do you mean? Is money made by the man who invents a motor at the expense of those who did not invent it?
Friday, July 28, 2017 ... more
Hold some cash, buy some insurance, there is always someone selling protection from bears, but nothing is a hundred percent effective. And statistically you are more likely to be killed by an avalanche or a Moose than a bear.
Thursday, July 27, 2017 ... more
Not efficient? So what?
It’s easy for investors to claim that market prices don’t make any sense because it’s often true: Market prices don’t make sense most of the time. But the job of any successful investor is not to spend their time pointing out this fact.
Wednesday, July 26, 2017 ... more
Why passive?
If you have the facts on your side, pound the facts. If you have the law on your side, pound the law. If neither are on your side, pound the table." It’s a legal dictum that the active lobby has taken to heart says Chris Veegh at 10X Investments
Tuesday, July 25, 2017 ... more
5 reasons
The only valid reasons for not joining the indexing party: 1. You can’t stomach the ride. 2. You’re following a program or plan where the type of fund is secondary to the allocation, 3. You are pursuing low-cost active strategies
Tuesday, July 25, 2017 ... more
In his book Jordan Ellenberg says which way you should go depends on where you already are. It's good advice for anyone trying to make sense of the financial world, where the honest answer to nearly every question is, "It depends."
Friday, July 21, 2017 ... more
“Simplicity has been difficult to implement in modern life because it is against the spirit of a certain brand of people who seek sophistication so they can justify their profession.” – Nassim Taleb
Thursday, July 20, 2017 ... more
All time highs
There is an interesting relationship between all-time highs in the stock market. Once you have hit an all-time high, the very next month you are likely to hit another all-time high.
Wednesday, July 19, 2017 ... more
In a way, index investing is the ultimate piggyback ride on the coattails of the active management community. If you think about it, the selection of stocks that are included within the major indices is solely due to the discerning opinion of the active management community.
Tuesday, July 18, 2017 ... more
Emperor's new clothes?
Quentin Marshall of Weatherby's Private Bank describes the asset management industry's story as akin to that of the "Emperor's New Clothes", in which fees are high and underperformance relative to an index almost assured.
Tuesday, July 18, 2017 ... more
Day 2
“Jeff, what does Day 2 look like?” That’s a question I got at a recent meeting. I’ve been reminding people that it’s Day 1 for a couple of decades … Day 2 is stasis.
Friday, July 14, 2017 ... more
Not so easy
As one famously successful fund manager put it, “Any normal person using the customary three percent of their brain can pick stocks just as well, if not better, than the average Wall Street expert.”
Thursday, July 13, 2017 ... more
Bernstein Wednesday, July 12, 2017
SA Mining Tuesday, July 11, 2017
Precious metals Tuesday, July 11, 2017
Friendly robot Friday, July 7, 2017
Millennials Thursday, July 6, 2017
From Peter Wednesday, July 5, 2017
About penny stocks Tuesday, July 4, 2017
PS rules Tuesday, July 4, 2017
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