“There’s only one absolute truth about investing…it isn’t easy.” – Howard Marks Investing is hard. Markets are extremely challenging. Beating the market is not easy. Coming to these realizations is maybe the hardest part about investing because we all like to assume that we’re above average. Case in point — a few years ago MarketWatch columnist…
Money Advice For Young People: Managing Money When There is None
Last week a received a call from a reporter from VICE named Allie Conti, who is setting out on a journey to learn about managing money. Like many of her fellow Millennials, Ms. Conti doesn’t have much experience with the markets, investing or even general personal finance: I never learned about “mutual funds” or “index…
Avoiding the Certainty Trap
Data availability is something of a double-edged sword in today’s financial markets. On the one hand, we now have a nearly unlimited supply of research, opinions, back-tests and historical simulations with which to base our investment views upon. On the other hand, the fact that we have more information available at our fingertips than ever…
Definitions for Financial Consumers
A few half-truth definitions from the world of finance: Due Diligence: My boss told me to sell this product. Proprietary: You’ll never understand it and the fees are much higher to boot. Volatility: When stocks go down. Prospectus: A 200-page document written and designed by lawyers to be so boring and detail-oriented that no investor will ever…
6 Reasons For David Swensen’s Success at Yale
In my book I devoted an entire chapter to the institutional investment world because that’s where I’ve spent my time in this business over the years. Many of those pages were devoted to Yale’s David Swensen, who I described as the Warren Buffett of institutional investing. Swensen wrote the bible on how to think about…
In Defense of Risk Parity (Or Any Long-Term Strategy)
Whenever markets fall investors look for comfort anywhere they can find it. Two favorite investor past-times include (1) finding someone or something to blame and (2) seeking out other investors or strategies that are performing worse than you are. It doesn’t make any sense, but for some reason people find solace in the relative misery…
Hurricane Amnesia
Here’s one for the glass is half full vs. glass is half empty debate: As of today, it has been a record 118 months since the last major hurricane struck the continental United States, according to records kept by the National Oceanic & Atmospheric Administration’s (NOAA) Hurricane Research Division, which list all hurricanes to strike…
Money Management Can be a Nutty Business
When markets are rising, professional money managers typically feel terrible about their performance when they’re trailing their peers or their benchmark. They’re still making money mind you, but just not as much as everyone else is making.
The Emerging Markets Rout Continues
In my last piece I said that you’re not really diversified if you don’t hate something in your portfolio at the moment. Stocks are the obvious candidate right now, as they were down anywhere from 6-10% in August depending on which market you’re looking at. But bad months are nothing. The true test of a…
How Much Diversification is Necessary?
A few readers have asked: How much diversification within my portfolio is necessary? I’ve received a variation of this question a number of times over the past few weeks. I can understand why individual investors would have a difficult time figuring this one out. The choices these days for building a diversified portfolio are nearly…
