How Inflation Affects Market Returns

Isaac Presley wrote a nice market update recently on his Cordant Wealth Partners blog. He broke down stock and bond yields by comparing some real (after-inflation) and nominal indicators to show where they currently stand in relation to their historical averages and ranges.

Predicting the Next Big One

In Seeking Wisdom: From Darwin to Munger, Peter Bevelin has an interesting take on the frequency of extreme events: Statistics shows that the frequency of some events and attributes are inversely proportional to their size. Big or small changes can happen but the bigger or more extreme they get, the less frequent they are. For example, there…

Getting What You Pay For (or Not)

The investment industry can be a very backwards place in many respects. For instance, seeing the price of a product go on sale generally makes people happy and induces them to buy more of it. In the markets, when things go on sale from a market crash that’s when investors are the most scared and…

Avoiding Process Drift

We’re roughly seven months into the year and people are already starting to talk about how certain investment styles don’t work anymore. In the financial world, people act like seven months is considered statistically significant because everyone assumes that short-term trends trump all. The proliferation of a wide variety of new ETFs and mutual funds…

Should Social Security Be Considered a Bond?

A reader asks: Should Social Security income be considered as part of the bond portion of a retired person’s asset allocation, thus increasing the stock portion? I’ve seen a number of opinions, articles and blog posts over the years about this question. It seems people tend to take a hard line and either say yes it…

Mohnish Pabrai on How to be a Mentor

In The Education of a Value Investor, Guy Spier talks a lot about one of his biggest influences in the investment business — Mohnish Pabrai, who is a very well-known value investor. I’m a huge fan of Pabrai because of his simple, common sense way of looking at the world.

20 People You Don’t Want to Invest With

I always find that it’s easier to use the process of elimination to figure out what works by first figuring out what doesn’t work in the hopes that all that remains is the good stuff. As Charlie Munger famously says, “Invert, always invert.” I have an entire section of my book devoted to negative knowledge…