Based on the MSCI World Index, the U.S. stock market makes up over 50% of global equity markets. We constantly hear updates about the Dow Jones, S&P 500 and even Russell 2000, but rarely pay attention to foreign markets. This home bias causes many investors to overweight U.S. stocks in their portfolio. As everyone debates the current…

“Volatility can prey on investors’ emotions, reducing the probability they’ll do the right thing.” – Howard Marks

“Prices fluctuate more than values – so therein lies opportunity.” – Joel Greenblatt I saw Joel Greenblatt speak at the Morningstar Conference earlier this summer. He has the uncanny ability to explain the markets and his investment process in a manner than everyone can understand which is not an easy thing to do for many…

“A goal without a plan is just a wish.” – Antoine de Saint-Exupery This was the headline and first few sentences from an AP story last weekend: Time to Ditch Rising Stocks, or Stick With Them? Is it time to cash out of stocks? The market has nearly tripled in a little over five years, and…

The trend towards passive investments continues to gain steam as more investors are opting for lower cost fund options. See this chart from Morningstar via Victor Reklaitis of MarketWatch:

“Risk, then, comes in two flavors: “shallow risk,” a loss of real capital that recovers relatively quickly, say within several years; and “deep risk,” a permanent loss of real capital.” – William Bernstein It’s been a long time since the S&P 500 has experienced a double-digit loss. The last one ended in October of 2011,…

“If you can get good at destroying your own wrong ideas, that is a great gift.” – Charlie Munger Warren Buffett famously ran a partnership for a small group of investors before turning Berkshire Hathaway into his investment vehicle of choice. He produced extraordinary results for himself and his investors. Many don’t realize this but…

“Investors are always fighting the last war, when in fact all crises are different.” – Harry Markowitz People have a hard time understanding risk. We only seem to worry about something after it happens instead of preparing for inevitable problems ahead of time. This comes from last week’s Wall Street Journal after the earthquake in…

“We display risk-aversion when we are offered a choice in one setting and then turn into risk-seekers when we are offered the same choice in a different setting. We tend to ignore the common components of a problem and concentrate on each part in isolation.” – Peter Bernstein Let’s say you were given fifty-fifty odds…

Morningstar had an interesting piece out this week about the alternative mutual fund universe. While Morningstar studies have shown that the most dependable predictor of future fund performance is low expenses, investors in this universe of funds aren’t following that advice: From 2011 to 2013, only 36% of the net $58 billion that has flowed…