In his book, Misbehaving: The Making of Behavioral Economics, Richard Thaler discusses a stock market experiment that says a lot about how people react to losses and their perception of risk: As in the previous experiment, the subjects had only two investment options, a riskier one with higher returns and a safer one with lower returns….

A few weeks ago I looked at three things that matter during a market sell-off. This sell-off has continued and investor angst grows. One of the best ways to avoid crippling mistakes during bear markets is to focus on what you can control. Here’s the follow-up with three things that don’t matter during a market…

Large cap U.S. equities continue to hold up well with the S&P 500 down roughly 12% from its all-time highs reached last spring. To some degree, this performance has masked the global bear market going on in the rest of the world. Take a look at this list of country ETFs from Bespoke Investment Group:…

Early in my career I received a very simple, yet powerful piece of advice about the markets: In a bull market you’re not as smart as you think you are and in a bear market you’re not as dumb as you think you are. The problem is that fear and greed don’t always allow us…

How many hedge fund managers would kill for the following performance characteristics over a 40 year time frame? Annual Returns: 7.7% Volatility: 6.9% Number of Up Years: 37 Number of Down Years: 3 Annual Win %: 93% Worst Annual Loss: -2.9% Average Annual Loss: -1.9% Max Drawdown: -12.4% On an absolute and risk-adjusted basis these…

I recently had the chance to talk with Aaron Watson on his podcast, Going Deep with Aaron Watson. We touched on a lot of different topics, including the writing process, networking and investing. We also talked about the institutional investment industry. Aaron asked me what I thought some of the similarities and differences are between…

The Wall Street Journal shared the results of a survey which shows many investors don’t understand how bond math works:

The S&P 500 has outperformed the MSCI World Index each of the past three years and six out of the last eight. This is quite a run when you consider how often U.S. stocks have outperformed the rest of the world’s markets over historically.

This whole low-interest rate environment seems to be getting a little out of hand. On Friday, the Bank of Japan surprised everybody and cut the interest rate they charge banks on excess reserves into negative territory. According to the WSJ, “Over a fifth of global gross domestic product, or 23.1%, will now be produced in…

I just finished The Index Card by Harold Pollack and Helaine Olen. It’s a really good personal finance book for those who need to understand a handful of simple steps you need to take to get your finances in order. I love the idea of narrowing down your financial philosophy so that it fits on an index…