August 2015

Investing, News August 26, 2015

Wild Monday

So what happened to the market on Monday? I don’t know and anyone who says they do know is full of it.  Because investing involves lots of numbers and math, it is easy to assume that there are clear answers to questions like this.  Math is constant.  2+2=4.  Investing is not constant.  2+2= whatever the next guy is willing to pay for it and that person might value 2 differently than you or I.  Increasingly, the next guy isn’t even a person at all, it’s a computer.  Math serves more as a frame of reference in investing than as an absolute. Ok, that was a boring non-answer.  I’ve found that people asking about investing don’t actually want an update on the reality of the markets so much as a quick story  – the more outrageous, the better.  We want someone to blame when the market goes down and we want someone to tell us…

Due Diligence, Investing August 19, 2015

The Fear Trade

The fear trade is alive and well even in this incredible bull market.  Listen to AM radio for an hour and you will likely hear at least one commercial for gold or annuities. “Are you prepared to lose 20, 30, even 60% of your life’s savings in the next stock market crash?  It’s not a question of if it will happen, but WHEN it will happen!!!” “Tired of losing money in the stock market?” Humans are hardwired in such a way that pain registers more significantly than gain.  The predisposition to obey fear has been passed down through the generations in order to avoid and escape predators.  The caveman who investigated a rustling in the bushes ended up as a bear’s lunch.  The caveman who ran away lived to hunt another day.  Today’s environment is different.  The humans who give in to fear run straight into the jaws of the…

News August 5, 2015

Fiduciary

There is a silent struggle over the word Fiduciary in the financial services industry.  I am biased not only because the firm I work for has a Fiduciary duty to its clients but because I think it’s the ethical thing to do.  One of the most frustrating things is discussing investing with a friend or relative and slowly realizing that they are being sold the investment product of the month by someone they think they can trust.  They are convinced that investing is about making timely trades in and out of asset classes, sectors, or even individual securities and that “their guy” has an edge.  This edge never seems to be quantified as their client statements don’t show returns or benchmarks in any meaningful context and there is no master plan that includes both their taxable and retirement accounts. The Fiduciary battle is important and is something all investors should be aware…