Recently, I was having a conversation with an investor regarding her investments. Most of her stock investments are passive index based. We discussed the current investment environment and she was having thoughts of possibly taking some of the profits she has and diversifying a bit more. She wanted to add a small portfolio that consisted … Read more
When it comes to investing there are essentially three risks, systematic, unsystematic, and behavioral. A brief understanding of these risks are as follows: Systematic risk: is the risk of the overall market. When the entire market rises or falls that is considered systematic risk. A dropping tide lowers all boats theory. Unsystematic risk: is the … Read more
Growing up in the Hawaiian islands was a treat. Especially, if you surfed, and I did. I remember as a kid watching the big wave riding surf contests held at Waimea Bay, Sunset, or Pipeline on the North Shore of Oahu. Back then the big wave surfers used longboards called guns. They would paddle these … Read more
Using long term thinking when investing is very important. It’s greatest importance will be felt in the long run on performance, but it matters most when evaluating your investment allocations and the investment’s you want to include in your portfolio. For example, if you have twenty years, and you prefer a passive approach to investing, … Read more
The BBC interviewed Charlie Munger in 2012 and Munger in that interview states that “you can never take the booms and busts out of a capitalistic economy.” He goes on to say that he and Warren Buffett have seen their portfolio drawdown by 50% three times over the years. Charlie says this is a part … Read more
Warren Buffett, Charlie Munger, and Jack Bogle have all learned from someone. Buffett and Munger both studied under Benjamin Graham. Buffett and Bogle both refer to John Maynard Keynes as one of the most influential people in their investment learning process. Keynes is considered one of the greatest economists in the history of the world. … Read more
The stock warehouse is a simple example of how to explain value versus price in the stock market can get forgotten in a crisis or major event to my kids. In order for some to grasp the concept of value versus price it sometimes takes putting the explanation in real world terms, so they can … Read more
If there’s one thing for sure about the stock market it’s that there are super smart people out there investing and trading the markets. Brilliant people. People with high IQ’s and excellent investing senses. Today, many smart institutional investor’s have realized the power of using computers to execute their trades using software programs and algorithms … Read more
In a press release dated April 21st, 2015 Dalbar research posts a chart from their annual Quantitative Analysis of Investor Behavior (QAIB) study for 2014. Below is the chart. The chart shows the cumulative returns by time or years of investors versus the S&P 500 Index and Barclays Bond Index. According to their study you … Read more
Below is an information graph of data from the US Census Bureau showing the US population broken down by age estimates as of July 2018. Studies have shown that on average a person’s highest earning years are between the ages of forty-five and fifty-five respectively. The logic behind this data is that most families have … Read more