Much of the time, investors are rational and the stock market is understandable and makes intuitive sense, But when fear or greed takes hold of the steering wheel, anything can happen.
In probabilistic terms, a “thousand-year” flood might be a “tail-end” (i.e. extraordinarily low probability) event, but that doesn’t mean it can’t happen tomorrow.
Passively “managed” products can be fine, as long as they are just following prices in whatever market they are tracking. However, if they become big enough that they become the market and are the one setting prices, it’s dangerous.
Whenever uncertainty abounds, such as the present, the brain seeks to find some semblance of control—even if it is just an illusion of control.
Nobody knows how long and far the coronavirus outbreak will go or how it will end. In a global economy, near-term cash flows will be hurt, but cash flows going out 10 or 20 years will not be.
Whether you’re an NFL team trying to make it to the Super Bowl or an investor who wants to generate better-than-average long-term results, your odds of success are greater if you ignore conventional wisdom.
As with any investment, price is what you pay, but value is what you get.
When investors compete to give their capital to private companies, you get standards that are lowered at the same time valuations are raised, a recipe for disaster.
While Luck’s retirement obviously has nothing to do with the inversion of the yield curve, I’ve often found the world of sports provides useful analogies to the world of investing.
Unfortunately, investors have an uncanny, destructive tendency to buy high (when they’re feeling overconfident) and sell low (when they’re scared).
While history suggests the road is likely to get increasingly bumpy over the next four months, it will be important (as always) to try to remain unemotional and stick with the plan.
Just like Clara Peller in the 1984 Wendy’s commercial, investors should be asking, “Where’s the beef?” at Beyond.
You know what’s worse than judging a book by its cover? Judging a book by its cover—then making financial decisions based on what you guess the book might tell you.
The doom and gloom headlines from December have turned ebullient, as the S&P 500 in the first quarter posted its best performance since the third quarter of 2009.
While Berkshire Hathaway CEO Warren Buffett has achieved well-deserved mythical stature among investors, even the “Oracle of Omaha” makes huge mistakes. Exhibit A is the recent debacle involving his investment in Kraft Heinz. I recently highlighted Buffett’s call in his 2018 annual letter to shareholders of Berkshire Hathaway for investors to focus on Berkshire’s “forest,” […]
Rational people don’t risk what they have and need for what they don’t have and don’t need.”
the only risk-less option giving you immediate access to your funds is a traditional bank savings account earning essentially 0 percent interest. Or is it?
We all need to realize nobody is immune to a sudden job loss or other income interruption.
Jack Bogle, the inventor of index mutual funds, said just weeks before his death on Jan. 16 at age 89 that index funds had become the “most successful innovation in modern financial history”.
Not only is volatility normal, it is necessary for generating outstanding long-term returns.
