During the holidays, I had some idle time and I re-read parts of Jason Zweig’s 2007 book, Your Money & Your Brain. It’s a good book with lots of interesting anecdotes. It was also one of my early reads into investor psychology. In one section appropriately named Fighting Your … [Read more...] about How I keep my long-term investing outlook?
The other day, I came across an interesting, albeit hypothetical, auction scenario: Ten companies were bidding for the right to drill in a land tract. Each had done a geological survey of the land and privately assessed how much oil is in there. These surveys were known to be … [Read more...] about Anchor on a business’s value, not its price
Last year in November I wrote a blog post (Why I Stay Invested in Stocks?) about some investors (they were my friends) who were convinced that a market crash was imminent, and they were waiting on sidelines with cash to invest. Well, this is nearly the end of 2018 and that crash … [Read more...] about Why that market crash didn’t happen?
This is not a panic post. I don’t know when the next market downturn would happen. I don’t care to know either. My investing is not based on predicting future events. As Howard Marks wrote once, "taking bold actions based on forecasts of things that are uncertain isn’t just … [Read more...] about Are you prepared for stock market winter?
Sometimes it feels like the stock market is mocking us -- intentionally doing the unexpected. When we invest new money, the stock market promptly falls as if it's punishing us. Other times, it jumps up after we had sold some shares. If you are an investor, you will encounter this … [Read more...] about Why does the stock market mock us?
It was some time in 2011 if I remember correctly. I had tuned to my local NPR station at lunch time. A financial advisor couple was getting interviewed. They had just released a new book on financial planning. It was a pleasant discussion. They seemed genuine. They also appeared … [Read more...] about Don’t take investing advice from people you don’t know!
Why everyone and their grandmothers don’t get rich investing in the stock market? It sounds straightforward enough to invest. All one has to do is buy an appropriate market index fund (or ETF) and hold it for ten or twenty years (the well-known buy-and-hold strategy). If you … [Read more...] about Don’t fall for steady returns
Recessions and expansions are normal phases of a business cycle in modern free-market economies. A recession occurs when the economy stops growing – instead, it contracts. This happens from time to time – the economy grows in fits and starts. The normal state of an economy is … [Read more...] about Real investors don’t fear a recession
If you check your stock portfolio every minute the market is open, you are setting yourself up for failure. Even every day is not good for your portfolio’s health. Perhaps every week is too frequent. Two reasons why this is so: Every-day price changes are random and carry no … [Read more...] about It’s not healthy to check stock prices every day
The bad news is that we, the individual investors, collectively don’t do so well when investing in stocks. The good news is that most of this underperformance is due to our own behavior and therefore can be fixed. Let’s first look at the evidence of our underperformance over … [Read more...] about Most investors underperform the stock market