How Investment Performance Affects Savings Rates

“There is nothing new in the world except the history you do not know.” – Harry Truman The 1980s and 1990s was a period of unprecedented financial market performance. These are the annual 220-year return numbers for simple total stock and total bond portfolio invested in the U.S. markets: These return numbers are absolutely mind-blowing…

Benjamin Graham: Father of the Efficient Market Hypothesis?

“Warren [Buffett], don’t worry too much about making money. It won’t change the way you live. It’ll change the way your wife lives.” – Benjamin Graham The first investment book I ever read was The Intelligent Investor by Benjamin Graham. Graham’s analogy about Mr. Market that he used to describe the stock market is still…

Retirement Concerns

“The real purpose of saving is to empower you to keep your priorities – not to make you sacrifice.” – Charley Ellis

The Equal-Weighted Sector S&P 500

“The nature of human psychology is such that you’ll torture reality so that it fits your models, or at least you’ll think it does. To the man with only a hammer, every problem looks like a nail.” – Charlie Munger

Investing, Basically

“Perceptions of future stress are felt now.” – Richard Peterson From Richard Peterson’s Inside The Investor’s Brain: Researchers examined the stress responses of two groups of rats after they were subjected to painful electric shocks. Group 1 received painful electric shocks 10 times per hour, while group 2 was shocked 50 times per hour. The…

A Portfolio Premortem

“The only guarantee, ever, is that things will go wrong. The only thing we can use to mitigate this is anticipation.” – Ryan Holiday In the book Obstacle is the Way author Ryan Holiday describes the benefits of the performing a premortem (emphasis mine): In a postmortem, doctors convene to examine the causes of a patient’s…

Book Review: Pragmatic Capitalism

One of the many reasons investors have been so whipsawed by the markets since 2007 is a lack of understanding about the dynamics at work between the financial markets and the economy.