Your Very Own Black Swan Strategy

“In the world of finance, the only black swans are the history that investors have not read.” – William Bernstein Following the 2007-09 financial crisis, many investors decided they needed insurance on their portfolio to protect against the possibility of another “black swan” event. It’s hard to believe that this was ever the case considering…

Why a Higher Dividend Yield Doesn’t Tell the Entire Story

“We never stretch for yield.” – Warren Buffett Annaly Capital Management (NLY) is a mortgage real estate investment trust company. They own real estate properties and pays out the majority of their earnings, around 90%, in the form of dividends to receive special tax treatment as a REIT. The share price as of year-end 2010…

The Four Abilities Every Investor Needs To Be Successful

“To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks.” – Benjamin Graham William Bernstein is one of the foremost advocates for individual investors.  When he talks about the dynamics of investing, I pay attention to what he says and most of the time I…

A Roth IRA for the Baby?

“Owning stocks is like having children – don’t get involved with more than you can handle.” – Peter Lynch “When you have children, you spend a lot of time with people you never would have chosen to spend time with, not in a million years.” – Louis CK

Sometimes the Stock Market Goes Down

“Investors cannot earn high returns without occasionally bearing great loss.  If the investor desires safety, then he or she is doomed to receive low returns.” – William Bernstein

A Lesson in Judging Risk From Seth Klarman

“A margin of safety is achieved when securities are purchased at prices sufficiently below underlying value to allow for human error, bad luck, or extreme volatility in a complex, unpredictable and rapidly changing world.” – Seth Klarman I had the pleasure of listening to legendary hedge fund manager Seth Klarman speak at a conference a…

Bond Returns and Rising Interest Rates

Here’s an interesting chart from the Wall Street Journal: I’ve seen variations of this one before, but it makes sense to re-visit this type of data so you can prepare yourself for possible future bond returns. It’s pretty telling how closely future 10 year returns track the bond yield. It’s not perfect, but definitely a…

What if Long-Term Thinking Really Catches On?

“You cannot manage outcomes, you can only manage risks.” – Peter Bernstein Last week Josh Brown laid out a really unique theory at The Reformed Broker with The Relentless Bid, Explained. The main takeaway from that piece is that there always seem to be a bid under the market when stocks drop because the investment advice…

The Origins of Economic Terminology

“If you asked someone on the street 100 years ago, ‘How’s the economy doing?’ They wouldn’t have had any idea what you were talking about.” – Jacob Goldstein, Planet Money