When it comes to investing, there is no such thing as a one-size-fits-all portfolio.
Barry Ritholtz
Little white lies are told by humans all the time. Indeed, lying is often how we get through each day in a happy little bubble. We spend time and energy rationalizing our own behaviors, beliefs and decision-making processes.
The beauty of diversification is it's about as close as you can get to a free lunch in investing.
You can blow on the dice all you want, but whether they come up 'seven' is still a function of random luck.
Any Wall Street advertising that does not go into the boring details of methodology is most likely to be pushing past performance.
We must recognize our own behavioral errors. To be blunt, you are not likely to become a cognitive Zen master anytime soon. But a little enlightenment could keep you from making some common investing errors.
Commissions add up, taxes are a big drag, margin ain't cheap. A good accountant costs money as well. The math on this one is obvious, yet investors often fail to recognize it: Keep your costs low and your turnover lower, and you will win in the end.
Owning a variety of asset classes means that some part of your portfolio will be doing well when the cyclical turmoil arises. A broadly diversified portfolio includes large capitalization stocks, small cap, emerging markets, fixed income, real estate and commodities.
Shopmas now begins on Thanksgiving Day. Apparently, escaping the families you cannot stand to spend another minute with on Thanksgiving Day to go buy them gifts is how some Americans show their affection for one another. Weird.
If your investing approach requires that you become Nostradamus to succeed, then you are destined to fail.
Getting more and more of our news from the social network is having significant repercussions for markets - and your money.
There is a shortage of doctors, and the American Medical Association is aiming to keep it that way.
History shows us that people are terrible about guessing what is going to happen - next week, next month, and especially next year.
Hedge fund managers charge so much more than mutual fund managers; alpha is even harder to come by. They end up selling a variety of things beyond mere outperformance.
Markets are frequently ahead of, and often out of sync with, the economy.
Based on a lifetime of observations and a few decades in the markets, I understand that societies, beliefs and fashions all move in long arcs of time. We call these arcs several things: cycles, periods, eras.
In social media, people cannot build big followings organically unless what they are putting out to the world has value.
TV producers want ratings and are willing to do nearly anything to get them. They gin up artificial conflicts and create an urgency for even the most minor of economic data points.
Whenever you hear a discussion about the short-term swings in any given stock's price, your immediate thought should be whether it matters to why you are investing.
The data strongly suggest that very good years in the U.S. stock market are followed by more good years.
'Returnless risk' is not how you prepare for a decent retirement.
Secular cycles are the long periods - as long as decades - that come to define each market era. These cycles alternate between long-term bull and bear markets.
Anyone can make an article longer; the skill is keeping it tight and lean.
With Twitter, you can build your own virtual trading floor and research department, populated by the smartest people on earth. Almost any subject or sector has you can think of, you can find a few people with an expertise in that area.
Most of the time, economic data is fairly benign. I don't wish to imply it is meaningless, but it is not a driver of stock markets. Indeed, the correlation between economic noise and how equity markets perform has been wildly overemphasized.
The good news is that economists are intelligent, engaging and often charming folks. The bad news is their work is often of little use to investors.
Even when you are right, there are costs and taxes associated with being tactical. When you are wrong, there are opportunity costs.
Asset managers have different approaches, and I don't wish to suggest there is only one way to run money. There are many ways one can attempt to reduce risk, improve performance, lower drawdowns and reduce volatility.
Have a well-thought financial plan that is not dependent upon correctly guessing what will happen in the future.
Indeed, eventually, random outcomes all revert to the mean, meaning that streaks eventually end. Understanding this is a key part of intelligent and rational investing.
Any time you speak to people about their posture, you learn about their most recent investment activity. When someone just bought stocks, they tend to be bullish; someone who just sold is bearish.
No one knows what the top-performing asset class will be next year. Lacking this prescience, your next-best solution is to own all of the classes and rebalance regularly.
If you are not making any mistakes, you are being excessively risk-averse. Investing involves risk, and that means you will occasionally be wrong. And although it is okay to be wrong, it is not okay to stay wrong.
People who work in specialized fields seem to have their own language. Practitioners develop a shorthand to communicate among themselves. The jargon can almost sound like a foreign language.
Whenever I see a forecast written out to two decimal places, I cannot help but wonder if there is a misunderstanding of the limitations of the data, and an illusion of precision.
Here is a dirty little secret: Stock-picking is wildly overrated. Sure, it makes for great cocktail party chatter, and what is more fun than delving into a company's new products? But the truth is that individual stocks are riskier than broad indices.
A number of bloggers in economics and the financial sector have risen to prominence through the sheer strength of their work. Note it was not their family connections nor ties to Ivy League schools or elite banks, but rather the strength of their research, analysis and writing.
Yearly data put the rest of the noise into perspective. Most of the weekly or monthly random up-and-down movements get smoothed out. Ultimately, this is where long-term investors should be focused.
Active management leads to lots of poor investor behavior. It sends people chasing after whoever has the hot hand at the moment.
Much of the traditional thinking about cash is well intentioned but unrealistic. Should you have six months of living expenses in the bank for emergencies? Sure. Do you? Probably not.
The consumption and production of energy is a major component of the global economy.
How are the cabs in your city? In Manhattan, where I work, they are rather awful.
In New York, the former lack of real competition allowed taxis to extract excessive charges, regardless of the poor service.
The way we finance homes in this country is slow, filled with middlemen, who run a nonstandardized evaluation process. This makes financing a home cumbersome and difficult.
It is important for investors to understand what they do and don't know. Learn to recognize that you cannot possibly know what is going to happen in the future, and any investment plan that is dependent on accurately forecasting where markets will be next year is doomed to failure.
Never forget this simple truism: Forecasting is marketing, plain and simple.
The ability to select stocks, manage them over time and know when to sell them is incredibly difficult, even for professional fund managers.
When it comes to investing, you are your own worst enemy.
The electronics industry expanded rapidly and the seeds for the semiconductor and software revolution were planted. The postwar period also saw the suburbanization of America, the rise of the homeowner, the build-out of the interstate highway system, and the rise of automobile culture. Credit availability expanded dramatically.
Once you research an idea, you begin to develop a perspective. Writing about anything in public, often in real time, has helped fashion my views.
