Self-Examination

Richard Feynman once said “The first principle is that you must not fool yourself – and you are the easiest person to fool.” This is true in all walks of life- we think we’re better looking than we really are, we think we’re smarter, better drivers, better parents, and better children. Of all the places…

All Indexes Are Not Created Equal

Small value stocks are up 25.5% YTD. Small value stocks are up 32.5% YTD. Nope, that’s not a typo. The first one represents Vanguard’s ETF, VBR. The second and better performing small-cap value ETF is IWN, from iShares. As you can see from the chart below, they were neck and neck until the election, and…

Even With Perfect Information

Tracy Alloway and Joe Weisenthal recently had Victgor Haghani, co-founder of LTCM and CEO of Elm Partners Management, on the Odd Lots podcast. Haghani told a story about an experiment he did in which subjects were given a loaded coin. They were told that the coin will land on heads 60% of the time. The…

Aaron Brooks and Saving Money

Ben Carlson recently wrote about the parallels between dieting and personal finance. In both cases, we know exactly what we’re supposed to do, but just knowing is not nearly enough. Our brains function in such a way that sometimes it helps to completely remove our mind from the equation. Other times we have to introduce…

Don’t Fear the Reaper

In a recent Bloomberg article, Luke Kawa writes how investors are positioning themselves as interest rates rise: Cumulative inflows into the iShares Short Maturity Bond ETF (NEAR), Floating Rate Bond ETF, SPDR Bloomberg Barclays Short Term High Yield Bond ETF, PowerShares Senior Loan Portfolio , and the Vanguard Short-Term Corporate Bond ETF  topped $400 million…

Use the MACD, And Moving Average Indicators To Perfection!

This was the subject line of an email that came into my inbox tonight and it’s something I’ve been thinking about for a while. No, not how to use MACD to perfection, but how investors think about signals and indicators. A few weeks ago I was riding the subway, when after a minute or two…

The Permanent Portfolio

For the last 35 years, the classic 60/40 portfolio returned 10.5% a year. It’s hard to imagine that these results will be matched over the next 35 years, which has a lot of people looking to alternative ways of managing a portfolio. Today I’m going to examine one of these alternatives, the “Permanent Portfolio,” which…

Mental Scar Tissue

The costliest mistake 2% investors make is timing the market. They sell after losses and buy back only when the coast is clear. The problem is not just the money you leave on the table this time, but these mistakes leave behind scar tissue that compounds in our brains. It doesn’t take long before we’re unable…

This Is Not Bearish

The S&P 500 just made an all-time high for the 11th time this year, and the 1134th time since 1928. Today, the Dow Jones Industrial Average crossed 19,000 for the first time ever. The natural inclination is that now might not be the best time to put new money to work. The data doesn’t support this,…

When History Suddenly Becomes Irrelevant

“The fact that something so unthinkable could occur has had a lasting impact on my view of life and on investing in particular” – Peter Bernstein I’m extremely proud of the event we put on this week, the Evidence-Based Investing conference. There were a lot of like-minded investors in the room and on the stage,…