Finance can be a very backwards industry. I understand why so many people outside the world of finance don’t understand what it is that goes on in our industry because many of the things that people believe or do just don’t make any sense. Here are ten of them: 1. People in finance believe that when…
Napoleon’s Corporal
Napoleon Bonaparte is widely recognized as one of the greatest war strategists and commanders in history. One of the most fascinating aspects of his wartime strategy involves something that is now referred to as Napoleon’s Corporal. The story goes that during the battle planning stages Napoleon would have one of his lowly corporals shine his…
What Do Share Buybacks Really Tell Us About the Stock Market?
Investors are worried about stock buybacks. The following comes from a recent Bloomberg piece: Chief executive officers, who just announced the biggest round of monthly repurchases ever, executed about $550 billion of buybacks last year, according to data compiled by S&P Dow Jones Indices. That compares with a net $85 billion of deposits by customers…
How Institutional Investors Use ETFs
As I stated last week, ETFs are a wonderful product innovation for the individual investor. However, most people don’t realize that ETFs were actually created for institutional investors. Those who are worried about passive investing taking over the markets point to the $3 trillion or so in ETFs as their main point of contention. In The…
Life Lessons From Famous Comedians
One of my favorite books from last year was Judd Apatow’s Sick in the Head: Conversations About Life and Comedy. I was recently going through all of my Kindle highlights (a very useful feature of reading on a Kindle) and noticed that I had done quite a bit of highlighting in this book. Most of it had nothing…
How Much Do Profits Matter To Stock Market Returns?
The Great Financial Crisis was missed by such a large number of pundits, economists and investors that during the ensuing recovery we’ve seen a huge influx in the number of people trying to predict a the next downturn. People desperately want to call the next big one before it hits. First it was fears of…
Investors in Search of 7-Minute Abs
One of my favorite scenes in the movie There’s Something About Mary is when Ted, played by Ben Stiller, picks up a hitchhiker. The hitchhiker goes on to tell Ted about his brilliant business idea inspired by the 90s workout phenomenon, 8-Minute Abs: Hitchhiker: You heard of this thing, the 8-Minute Abs? Ted: Yeah, sure,…
Are European Stocks Cheap or is the U.S. Expensive?
One of the most counterintuitive aspects of investing is the fact that you almost need to have bad news for things to get cheap enough to create a good long-term value. Markets or securities don’t become undervalued all on their own. There’s usually a catalyst involved in the form of poor fundamentals, bad news, missed…
How To Pick The Right ETF
ETFs are one of the greatest financial product inventions investors have ever seen. They’re low-cost, tax-efficient and transparent. Maybe best of all they’re extremely convenient, offering diversified or niche strategies that would have been nearly impossible for most investors to put together themselves in the past. Investors have taken notice based on the fact that…
The Cost of Not Paying Attention
I’m constantly amazed by the number of stories I read each year about wealthy people getting swindled in a Ponzi Scheme or being taken advantage of by a shady financial advisor. The wealthy are by far the biggest targets for fraud and scams and yet they are still far too trusting and nonchalant about who they give their…