The S&P 500 last closed at an all-time high in mid-August. We’re only 3-4% away from that number and stocks haven’t done much lately, but many investors become very nervous when they hear about all-time highs in the market. After all, the S&P 500 got cut in half following all-time highs in early-2000 and late-2007. Therefore,…

“High prices attract buyers, low prices attract sellers.” There are generally two reasons for a given investment strategy to “work” over time: You earn a premium by accepting more risk. You take advantage of the behavior of other market participants. If I put my rational, textbook theory cap on, number one should make sense. But there’s…

If I had to pick just one behavioral bias to help understand why people make the decisions that they do it would be loss aversion. Daniel Kahneman’s research discovered that people regret losses around twice as much as gains make them feel good. Some people will look at these types of biases and conclude that…

Investors have to take some personal responsibility for their own actions, but one of the reasons so many people struggle with their investments is because many in the field of finance tend to perpetuate myths, rules of thumb and assumptions that just aren’t true. Here are some that come to mind that can be harmful…

Here’s a fascinating stat from Vanguard CEO Bill McNabb (who recently sat down for another podcast interview with Barry Ritholtz): One of the figures I always love to describe to people is — in 2000 the Internet was just starting to take hold, we had about $500 billion under management with 12,000 people. Today we’re…

As of the end of 1999, it’s estimated that there was roughly $400 billion in assets under management in hedge funds. Fast forward to today and there’s almost $3 trillion in AUM, a compounded annual growth rate of almost 14% (much higher than the returns earned). I think the real turning point for the huge…

“There’s one good financial idea every decade or so, and 5 to 10 marketing ideas a week.” – Eugene Fama The Vanguard Total World Stock Market Index Fund holds a little over 7,600 securities. The Vanguard Total U.S. Bond Market Index Fund and Total International Bond Market Index Fund collectively hold over 12,400 securities. As…

I talked to Anora Mahmudova from MarketWatch earlier this week about everyone’s favorite topic in the institutional money management world lately — the Ivy League college endowment performance figures. Performance numbers for fiscal year-end 2016 were relatively underwhelming. These things happen when you invest in risk assets. You can’t expect consistent results if you wish to…

Personal finance experts are constantly trying to get people to cut back and spend less. If only everyone would pack a brown bag for lunch and cut out the lattes every day there would be no retirement crisis, they tell us. While I think that lifestyle inflation is an issue for many people when trying…

Interest rates are a huge driving force behind many investment decisions. You can call them discount rates, hurdle rates, lending rates, borrowing rates or whatever, but their level definitely has an affect on risk appetites. But I also think it’s possible for investors to put too much faith into the almighty interest rate. For instance,…