“Risk is the permanent loss of capital, never a number.” – James Montier Risk management is something every investor realized they needed following the 2007-2009 financial crisis. The same thing will happen when the next bear market hits. But too many investors learn the wrong lessons or take misguided advice about how to approach risk….

Like many I watched the Master’s golf tournament this past weekend. On Saturday, Phil Mickelson finished the day five under par to set himself up in third place going into the final round. For some reason, in Mickelson’s post-round interview, the CBS analyst asked Phil what his wardrobe plans were for the next day. Mickelson said he…

One of the common misconceptions I’m starting to hear from investors is that because we’re in a low interest rate environment, stocks either can’t or won’t fall very far from these levels. This is the TINA (there is no alternative) argument that says because over the longer-term bonds returns will be much lower from today’s…

Dean Mathey was a successful investor who served as chairman of the investment committee at Princeton from the 1920s through the 1940s. Late in his career he privately published a book called Fifty Years of Wall Street that included a section with nine lessons learned during the Great Depression, It was reprinted in the book The Investor’s…

In August of 2007, we had one of the first truly large market dislocations that preceded the financial crisis. All at once, a large group of the biggest quantitatively managed hedge funds all started to get crushed at the same time. In just a couple of weeks, strategies that had worked brilliantly for years stopped…

There’s an old saying that stress is the difference between where you are and where you would like to be. If that’s the case there are a lot of people still trying to get to where they would like to be when it comes to their finances.

I posted the following chart of the current 30 year fixed rate mortgage on Twitter last week: I said that today’s roughly 3.5% mortgage rates are going to look silly someday so not all of the low interest rate policies have hurt savers that can take advantage. If you’re able to lock in low interest…

Mohamed El-Erian, the former PIMCO CEO, wrote a piece for Bloomberg View questioning the merits of emerging markets as an asset class. Before making his argument, El-Erian laid out three characteristics of an asset class, which I’ve paraphrased: The components share similar characteristics (i.e., geography, economic or financial commonalities, etc.) The majority of the components…

Standing on the shoulders of giants by learning from the best in a given field is a great way to get a better grasp of your subject matter of choice. A favorite pastime for investors is to read and share quotes from the likes of Warren Buffett, Paul Tudor Jones, Jesse Livermore or any number…

Last year I wrote about the worst 10 year returns earned on a simple 50/50 portfolio of stocks and bonds. A reader recently dug up that post and asked for some further information and a look at different scenarios on the returns of a 50/50 portfolio made up of the S&P 500 and long-term U.S….