Beginning in the summer of 1997 a number of southeast Asian countries experienced a financial crisis that would wreak havoc on their currencies and the broader emerging markets in general. Countries like Thailand, Indonesia and South Korea all experienced a severe depreciation in their currencies. The MSCI Emerging Markets Index proceeded to get chopped in half over…

“Investors are neither rational or irrational. They’re human.” – Jason Zweig Jason Zweig talked with Russ Roberts on the EconTalk podcast this week. I never realized that Zweig helped Daniel Kahneman write one of the best books ever published on behavioral psychology — Thinking, Fast and Slow. Zweig spent two years working with Kahneman on the process and…

Markets got off to a terrible start to the year. Small caps, emerging markets and international stocks were all in bear market territory. Here’s what happened next: Investors have spent an inordinate amount of time worrying about pretty much everything — real estate, oil prices (being too high or too low), interest rates, economic growth,…

As I continue my search for a new home in the real estate market I can’t help but think about how different my home-buying experience is from what it was like for my parents or others in previous generations. First of all the home search process is completely different. Everything is online these days and you…

My colleague Barry Ritholtz recently sat down to talk with Burton Malkiel — of A Random Walk Down Wall Street fame — on his Masters in Business podcast. Right off the bat Malkiel did some myth-busting on the Efficient Market Hypothesis: What efficient markets are associated with which is wrong is that efficient markets mean that…

In his latest monthly missive, Bill Gross shares some thoughts on financial market returns from the past four decades: Since the inception of the Barclays Capital U.S. Aggregate or Lehman Bond index in 1976, investment grade bond markets have provided conservative investors with a 7.47% compound return with remarkably little volatility. An observer of the…

“I think I’ve been in the top 5% of my age cohort all my life in understanding the power of incentives, and all my life I’ve underestimated it. And never a year passes but I get some surprise that pushes my limit a little farther.”               – Charlie Munger…

My wife and I bought our first home in late-2007/early-2008. As real estate agents like to say, it was a buyer’s market. The real estate market had peaked a few years earlier. The worst was yet to come but people were already starting to feel the pinch. It seemed the best way to get a…

One of the problems with the typical “trust me, we got this” attitude that you often see with financial professionals is the fact that most of the time their unwitting clients don’t really even understand what’s going on in their own portfolios. There are really no independent parties overseeing the overseers so a lot of…

Higher than average U.S. stock market valuations and lower-than-average interest rates would lead any rational individual to assume that future market returns should be lower than average from current levels. This is a reasonable assumption when you consider a simple 60/40 U.S. stock/bond portfolio has just had one of the best five year runs in…