Michael Batnick

Influence, Temptation, And Persuasion

Robert Cialdini’s Influence: The Psychology of Persuasion, has removed any lingering doubt I had that we are reasonable creatures. Cialdini shares so many examples of experiments that at times I literally stood up in disbelief. Here’s a good one: More compelling evidence for the importance of similarity in determining whether we will imitate another’s behavior comes…

SPY, 24 Years Later

What started as an experiment has proved to be an unequivocal success. Twenty-four years ago today, SPY was listed on the American Stock Exchange. Today, there are more than 6,000 ETFs/ETNs, which give investors the ability to trade baskets of stocks all day, unlike traditional mutual funds. ETFs now hold $3 trillion in assets, with…

Sell Netflix, Buy Blockbuster

“The difficulty lies, not in the new ideas, but in escaping from the old ones.” Keynes There’s nothing wrong with ideas, new or old, but the problem is that once we come public with them, it becomes incredibly difficult to change our mind. To admit that what we once believed is no longer valid can…

Chasers Gonna Chase

Eric Balchunas shares smart-beta flows since the election. Breakdown of smart-beta flows since election. Value ETFs, so hot right now. Value ETFs. pic.twitter.com/ToO0bACLoL — Eric Balchunas (@EricBalchunas) January 19, 2017 Not surprisingly, this lines up pretty well with how these different risk factors have performed over this time. ETFs have given investors the perfect vehicle…

The Most Powerful Force In The Universe

Anyone can solve the equation 6+6+6+6. But ask somebody to calculate 6x6x6x6 without a machine and they’re going to look at you cross-eyed. The human brain was designed for linear, not exponential processing. The other day I joked about the Dow reaching 2,000,000 by the year 2099, a one hundred fold gain from today’s prices. I was…

The Final Results Are In

Last week, Morningstar published their Asset Flows Commentary for 2016. As you can see in the chart below, active funds have had more outflows in each of the last two years than they did in 2008. Below, I pulled some of the notable numbers (emphasis mine). Among U.S. equity funds, passively managed funds–led by Vanguard’s offerings–took…

The Ignorance of The Future

“Three causes especially have excited the discontent of mankind; and, by impelling us to seek remedies for the irremediable, have bewildered us in a maze of madness and error. These are death, toil, and the ignorance of the future” – Charles Mackay People spend a lot of time thinking about the future, it’s part of…

Looking For The Next Amazon

Amazon is the sixth largest company in the S&P 500 by market cap. Incredibly, they wear this crown despite having earned less than 121 different companies over the previous twelve months. It’s no secret that Amazon is an expensive stock.  Even if Bezos were to capture 100% of the total retail revenue, its price-to-earnings ratio…

Normal Accidents

The S&P 500 is about to wrap up its eight consecutive year of positive returns. If this continues into next year, it would match the longest streak of all-time. For some context, in the nine years from 1991-1999, the S&P 500 gained 450%; In the recent 8 year period, the S&P 500 is up 193%….

Time Is All You Have

“Time is all you have. And you may find one day that you have less than you think.” – Randy Pausch When I finished reading When Breath Becomes Air, my wife walked into our bedroom and found me with tears running down my face. I’m not talking about a single renegade tear that fought its…