A Simple Approach to Reduce Portfolio Risk

“We must base our asset allocation not on the probabilities of choosing the right allocation but on the consequences of choosing the wrong allocation.” – Jack Bogle One of the most important decisions investors have to make when constructing a portfolio is how to spread their investments between stocks, bonds, cash and other investments. Asset…

Unfortunate Realities of the Investment Business

“Any time anybody offers you anything with a big commission and a 200 page prospectus, don’t buy it.” – Charlie Munger These aren’t written in stone, but they give you a good idea about some of the unfortunate realities of the investment business. All else equal, a talented sales staff will trump a talented investment…

A Closer Look at CAN SLIM

“Even investors who were guided by a quantitative stock selection system can let their human inconsistencies hogtie them.” – Jim O’Shaughnessy

Peter Lynch on Stock Market Losses

“Far more money has been lost by investors preparing for corrections, or trying to anticipate corrections, than has been lost in corrections themselves.” – Peter Lynch I recently came across an old Peter Lynch interview for Frontline on PBS from the mid-1990s. In it the legendary former mutual fund manager discusses a wide range of…

How Diversification Works

“The only investors who shouldn’t diversify are those who are right 100 percent of the time.” – John Templeton It’s often said that diversification is the only free lunch in finance. However, this an incomplete statement because diversification alone doesn’t get you all the way there. There are no benefits to diversification if you don’t…

Unlearning From Peter Bernstein

“I don’t think that many investors have learned that the more you press, the more problems you get into.” – Peter Bernstein By far the best thing I read this week was an article by Jason Zweig. It had nothing to do with current events or risks in the markets. In fact, it was published…