This week I had lunch with my first boss who gave me my start in the investment business. I learned a lot from him in my first few years and it’s amazing how often I go back to some of the basic principles he taught me.

A reader asks: I have a fairly large sum of money to invest, but I’m nervous about current stock market levels. What are my options to put this money to work in the markets? I’ve actually been getting this question or some variation of it from quite a few people for the past few years….

There’s a great scene in the movie Ex Machina where genius inventor Nathan describes how he was able to crack the code for creating artificial intelligence in a robot. (Not sure if this is a spoiler alert, but if you haven’t seen the movie yet and want to go in blind, skip this next paragraph.)…

Risk-adjusted return measures have been around for some time now, but following the financial crisis professional money managers and asset allocators zeroed in on these formulaic performance metrics like never before. One of the most well-known risk-adjusted return formulas, the Sharpe Ratio, is simple a measure of return per unit of risk. It takes the annual…

Over an 18 year period Bernie Madoff claimed to offer his investors annual returns of nearly 11%, not too far from the average long-term gains in the stock market. The crazy thing about Madoff’s Ponzi Scheme was not that he was offering outrageously high (fake) returns to his unwitting investors. It’s that he was offering…

Ten questions I’m pondering at the moment:

Earlier this week I took a look at how inflation has affected market returns over the years. As you can see from the chart below, inflation has historically run in excess of 4% one out of every three years while it has been 2% or higher two-thirds of the time: The next logical question — which…

In one of my favorite psychology books, Mindless Eating, there are a number of interesting studies that show how the way food is presented or described can have a huge impact on they way it’s viewed or rated. For example, a group of researchers took two pieces of day old cake. One was simply labelled…

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.

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…