One of the reasons so many people have such a difficult time with their finances is because they come into the process with faulty assumptions. There are unrealistic and ill-informed expectations that set people back from the start.

“What is the reward of being right, benchmarked against the cost of being wrong?” – David Rosenberg For a number of years David Rosenberg was one of the top dogs at one of the largest, most well-known firms on Wall Street. As he told Barry Ritholtz on a recent episode of Masters in Business, it…

Investors have a habit of thinking in terms of extremes. Active or passive. All-in the markets or all-out. Stocks are either topping out or about to bottom. Markets are perfectly efficient or wildly inefficient. It’s much easier to go to the extreme viewpoints because it acts as something of a mental shortcut. The brain is constantly…

As I’ve stated in the past, one of the hardest things to do in all of finance is predict the direction and magnitude of interest rate movements. The variables involved are seemingly endless. The chart above shows interest rates over the past 225 years. Many use this historical construct to build their forward-looking interest rate…

Since the financial crisis the flows into passively managed funds have caused many in the industry to predict that we’re in an index fund bubble. I think too many people throw around the term ‘bubble’ without considering what an actual bubble is, but it’s quite possible they’re looking in the wrong place. Private investments have quietly…

I shared a statistic in my last post that received a fair amount of questions and scrutiny from readers (see: Playing the Probabilities). Namely, that the worst 30 year total return on the S&P 500 was close to 850%. When investors see a number this large the first reaction for many is disbelief. I’m always…

The following is one of my favorite running stats on the stock market: Over the years I’ve noticed that whenever these types of long-term numbers are presented there tend to be two extreme responses: See, put your money in stocks, close your eyes and you’ll be fine in a couple decades. Who has a twenty…

The big “news” this week in social media was that Twitter did away with their ‘favorite’ button and replaced it with a ‘like’ button. This also meant a shift from a star to a heart when you click this function. The Twitter faithful was less than enthusiastic about these changes as you can see from…

There are many different ways to make money in the markets. There’s no one-size-fits-all for every investor. But the ways people lose money are fairly common — chasing past performance, groupthink, overconfidence, loss aversion, fear (of missing out and of being in), looking to get rich in a hurry, taking the markets personally and not admitting…

I’m a huge fan of the WTF podcast from Marc Maron. Maron has an uncanny ability to get celebrities to open up on both personal and professional matters. In a recent episode he was talking to actor Jason Bateman, who’s one of my favorite comedic actors (Arrested Development, Bad Words, Juno, etc.). Bateman plays the…