In my last post I talked about how difficult it can be to invest in emerging markets because they are so volatile. Going back to the late-1980s, emerging markets have exhibited over 60% higher volatility in monthly returns than the S&P 500. Small cap stocks, as measured by the Russell 2000, have also shown more volatility…

I get a steady stream of questions from readers in my inbox. I try to respond to as many as I can but thought it would be a good idea to start answering some of those questions here on the blog. I’ll try to do this once a month so feel free to email me…

Ever since the financial crisis investors have been bombarded with books, blog posts, articles and advice about how to survive the next bear market/Lehman Brothers/black swan/recession/subprime/1987/big short moment in the markets. And don’t get me wrong, preparing yourself mentally for market downturns can be a helpful exercise. These things are inevitable so planning for a…

Lately I’ve been noticing an increasing number of stories about people who have managed to save a decent chunk of money in a relatively short period of time to be able to retire at a very young age. Here are a few I’ve seen recently along with some advice from each. This couple is retiring early…

Traditional portfolio management is based on the premise that you allocate to stocks for growth and bonds for stability. Bonds earn their place in a portfolio by providing valuable diversification benefits as they typically counteract stock market losses during bear markets. Bonds can act as both a source of dry powder when stocks are falling and…

Thinking process over outcomes is one of those simple, yet difficult pieces of advice that is useful in many areas of your life. It’s difficult because we’re so obsessed keeping score and thinking in binary right or wrong terms. Since luck and randomness play such a large role in a complex world it’s more important…

“If you can get good at destroying your own wrong ideas, that is a great gift.” – Charlie Munger Last year Michael Mauboussin and Dan Callahan from Credit Suisse performed an experiment to test how accurate people are at estimating their own abilities. They set up a trivia quiz of 30 true or false questions,…

It seems that every investor these days considers themselves to be a contrarian, so much so that the term doesn’t carry as much weight as it once used to. I almost hate to even define myself as a contrarian anymore. I don’t think being a contrarian is as much about going against the crowd as…

Harvard professor Clayton Christensen famously laid out the theory of disruptive innovation in the mid-1990s. In basic terms, disruptive innovation occurs when a new company or idea shakes up an existing industry, product or market. It was fortuitous timing on his part as we’ve seen firms such as Amazon, Facebook, Airbnb, Uber and Google spring up…

Bloomberg’s resident ETF expert, Eric Balchunas, shared some interesting stats today on the habits of millennial investors. Their use of ETFs has exploded in recent years, up nearly 60% over the last year. Also, a greater percentage of millennials use ETFs than older generations: Millennials: 41% Gen X: 25% Baby Boomers: 17% While millennials seem…