“The way we traditionally conceive of ignorance—as an absence of knowledge—leads us to think of education as its natural antidote. But education can produce illusory confidence.” – David Dunning I have to imagine that having a behavioral bias named after your work is one of the highlights of the psychology profession (the Nobel prize isn’t…

The best thing I read this week comes from Bob Maynard, CIO of the $14.2 billion Idaho Public Pension Plan. Maynard’s entire approach is based on the premise that increased complexity is failing professional investors. Instead of fighting complex markets with complex strategies, Maynard favors a simpler approach, as he states in a write-up for…

Forbes has an excellent profile out on DoubleLine’s Jeffrey Gundlach. The entire piece is worth a read since Gundlach is not only one of the most respected investors out there today but he’s also very outspoken and entertaining. There was one part of the interview that I thought was interesting as it relates to the…

Last week I looked at some of the options available to bond investors in a low rate world. I showed that subsequent returns over the next decade tend to track the current interest rate level very closely. Here’s that graph again from the Wall Street Journal:

“We’ll begin with the obvious: about 80% of all mutual funds could shut their doors today and not be missed.” – David Snowball

“It [precious metals stocks] has bone-crushing volatility.” – William Bernstein If there’s been a worse place to be as an investor over the past few years than precious metals stocks then I haven’t found it. This year a diversified basket of these metals and mining companies is down around 16% but over the past three…

Asset allocation is the most important investing decision that rarely gets much discussion. Sure, investors are constantly talking about going all-in or all-out between stocks and cash, but that’s not really asset allocation, that’s portfolio suicide.

Research Affiliates has a useful new online tool that allows investors to play around with expected risk and return statistics for a number of different markets. You can sort by asset class, country or region. Here’s one that shows the 10 year real expected returns for a handful of asset classes: You should notice an…

“Financial advisors frame themselves as investment managers, providers of “beat-the-market” pills, when, in truth, they are mostly managers of investors.” – Meir Statman In my opinion, managing your emotions is by far the most important aspect of managing money. For a number of reasons – time, lack of expertise or lack of willpower – it…

Oil prices are down nearly 20% this year. This has hurt energy stocks, as the sector off around 5% on the year versus a 7% gain in the S&P 500. At one point the energy sector was down nearly 25% from the highs reached earlier this year.