Whenever there’s a sea change in a given industry caused by an upstart, competitor, or new way of doing business there are typically two ways the incumbents can play it: They can underreact, stay on the same course, and hope to keep market share. They can overreact, overhaul their way of doing business, and hope to…

I spend a lot of time thinking and writing about how better technology and an improved knowledge base are affecting the financial markets but these changes will likely have an even greater impact on the labor markets. I tell my wife all the time that our three-year-old will probably work in a job or industry that…

Daniel Kahneman once said, “Hindsight makes surprises vanish.” The hindsight bias can lead investors to constantly fight the last war. Since the financial crisis the last war has made top calling in the markets a cottage industry. Looking back now the peak before the prior crash looks easy. It was not. Predicting when the music will…

A few years ago I attended an institutional investment conference headlined by John Paulson, the man who became famous following the real estate crash for the greatest trade ever. While Paulson is known for shorting sub-prime mortgages he actually specialized in merger arbitrage before tackling the macro hedge fund world. Merger arb is a strategy…

A number of people have asked for my thoughts on this blog post from Lightfield Capital about the potential for baby boomers to take down the stock market in the coming years from forced sales during retirement. Here’s the gist of the argument from this well-reasoned post: a combination of rebalancing from stocks to bonds as people…

Earlier this week I wrote about how holding can be one of the hardest aspects of investing. Anyone can buy or sell but holding takes discipline. I promised a follow-up to discuss how I handle this. To offer a potential solution I’m going to walk you through my evolution on how I’ve come to think…

The CAPE ratio is a valuation measure that gets a lot of publicity from the financial media (mainly because of its namesake, Robert Shiller). There’s been a lot of ink spilled on how effective it is as a market metric. My stance is that it’s far from a perfect valuation measure but there are no…

“The easy money has been made” is one of my least favorite sayings about investing. Making money in the markets is never easy. In fact, I would argue that it’s always hard. Convincing yourself to buy during a bear market is hard. Convincing yourself to hold during a bull market is hard. Figuring out what to…

Henry Ford started his famous assembly line in 1913 for mass production of the Model T. It’s estimated that this idea decreased the time it took to build a car by close to 80%. In order to keep the prices relatively low, Ford made every car the same so they could all be produced on…

Bloomberg’s Eric Schatzker had a wide-ranging interview this week with Larry Fink, head of the $5.1 trillion fund behemoth Blackrock. The entire interview is worth a read for anyone interested in investment management but Fink’s thoughts on the retirement crisis stood out to me: We don’t spend enough time as a society understanding how bad…