“We tend to be inadequate historians.” – Robert Frey A couple weeks ago I covered a little discussed topic involving the the use of historical market data. Namely that you have to take market returns that go back to the turn of the 20th century with a grain of salt because of the fact that costs were…

Nearly four out of five working households have retirement savings of less than one times their annual income. For those who carry a balance on their credit card, the average amount owed is over $15,000. Forty-seven percent of people would have a hard time coming up with $400 in the case of an emergency. The…

Early on in my career a portfolio manager told me a little secret about the money management business. He said, “Every professional asset allocator we talk to says they’re looking to evaluate our shop based on the four Ps — people, process, philosophy and performance. The four Ps are actually performance, performance, performance and performance.”…

A decent bull market sandwiched between two of the most brutal bear markets in history produced one of the worst 10 year stretches ever in the S&P 500* in the first decade of the 21st century. Many investors labeled the 2000s as the lost decade for stocks. Considering the S&P lost around 1% a year…

“Productivity, put simply, is the name we give our attempts to figure out the best uses of our energy, intellect, and time as we try to seize the most meaningful rewards with the least wasted effort.” – Charles Duhigg I heard a joke at a stand-up show last year that went something like this: If…

Alpha, n. Luck – Jason Zweig, The Devil’s Financial Dictionary Professional investors are in constant search of the ever elusive alpha. Teams of MBAs, PhDs and CFAs scours every corner of the financial markets looking to outperform. This pursuit of outperformance, after accounting for the risk taken and fees paid, is extremely difficult. For many…

It’s easy to get bogged down in pointing out human foibles when studying the markets because investor psychology and emotions play such a large role in shaping the people’s decisions. Your brain is constantly playing tricks on you, but the brain is also one of the most impressive machines on the planet. It can do…

Tesla is one of the hottest company in years. Pre-orders for the new Model 3 electric car are now over 325,000…for a car that won’t be released until late-2017 at the earliest. Elon Musk is a bonafide celebrity at this point. He followed up Tesla’s shocking numbers by landing a SpaceX rocket on a floating…

As U.S. stocks and valuations have continued to move higher throughout this latest cycle there has been a growing chorus of intelligent industry observers — beyond the usual fear-mongering perma-bears — who are predicting lower stock market returns in the coming years or even decades for the stock market. The combination of higher prices, higher…

In a paper written for the Journal of Portfolio Management called The Myth of Risk Attitudes, psychologist Daniel Kahneman explains why human nature makes it so difficult to succeed as an investor: A central claim of prospect theory is that people are not consistently risk averse. Yes, they are much more sensitive to losses than to gains. But…