When Stocks and Bonds Fall

“The economy has changed and investors can no longer rely on a diversified stock-bond portfolio to provide protection in times of market volatility, according to JP Morgan Asset Management.” This comes from a recent Bloomberg article, A Diversified Portfolio May Not Help Investors Much This Year. We’re just two months into the year, but this observation is…

Changes

The past 12 months are a perfect sample to support Mandelbrot’s claim that “large changes tend to be followed by large changes, of either sign, and small changes tend to be followed by small changes.” Using rolling 30-day periods, from January 2017 through January 2018 there were 120 readings where the S&P 500 did not have…

Animal Spirits: Phony Happiness

On today’s show we talk about: How higher inflation is simultaneously good and bad for stocks. Why we love stories. The good and bad with private equity. Is there such a thing as a permanent portfolio? What Ben got from his MBA. Scary market predictions. Vanguard’s new factor funds. Links The new permanent portfolio From…

Seeing Your Blind Spots

“The first principle is that you must not fool yourself — and you are the easiest person to fool.” -Richard Feynman Anybody who has ever tried to beat the market knows that understanding psychology is just as important as understanding a business. You can know a company’s return on equity to the third decimal and what management…

These Are the Goods

Articles An investor without a faith is doomed. By Dan Egan The fully-invested bear By James Montier Humans are social animals. But the internet is a cesspool. By Nicholas Thompson and Fred Vogelstein If there were inter-market relationships we could set our watches by, everyone would always know what time it was. By Josh Brown…

Animal Spirits: The Meltdown

On today’s show we talk about: Recent market volatility What held up well (basically nothing) Stories we tell Who to blame How noobwhale investors will react to a bear market Non-correlated strategies Where hedge fund fees go Listen here: A close look at where the money flows suggests a more complicated story Barry with ex-CIA…

A Worthwhile Timesuck

I spend way too much time on Twitter. I’ve never attempted to figure out exactly how many hours a week that I’m on the platform because it would be impossible, frightening, and probably wouldn’t change my behavior. I already knew this, but it really crystalized for me while reading Cal Newport’s Deep Work. A few…

An Unprecedented Decline

Conventional wisdom goes that tops are a process. This makes sense when you think about market psychology. In a rising market, every pullback is bought, which conditions us to expect future dips to behave like previous ones. But eventually, bounces are met with less enthusiasm and the rallying cry of buy the dip morphs into sell…

These Are the Goods

Articles Bonds are just a cheap form of insurance around your equity slice. By Cullen Roche Real returns thus far in this decade are higher than they were in the 1980s By Ben Carlson You were also close with Marlon Brando? With Chris Heath and Quincy Jones There’s a fascinating case study here on how…

35 Steps To a Market Bottom

-1% Mock the permabears -2% Meh -3% Yawn -4% Off the highs -5% Pullback -6% Healthy correction -7% Buying opportunity -8% Stay the course -9% This too shall pass -10% Correction territory -11% I’m a long-term investor -12% Stocks always come back -13% Don’t panic -14% Draw lines on a chart -15% Look for attractive…