I’ve been learning investing lessons since I was a kid. Here are a few investing lessons that stuck. Investing Lesson 1 In the early nineties I trained with Smith Barney back in Hartford, Connecticut. One morning I arrived at class early. Two of the instructors were talking with a student and were joking about how … Read more
The average rate of inflation from 1970 until 2020 has averaged about 3.85%. Instead of this rate we’ll use a lower estimated rate of 3% as an average for examples. This means if your cost of living today (2020) is $100k per year for goods and services that you spend annually then the following is … Read more
The successful corporation of Apple actually had 3 founders when it started back in 1976. Ronald Wayne was the third founder along with Jobs and Wozniak. The three gentlemen signed the contract between them in 1976. Twelve days later Wayne sold his 10% share of the partnership back to Jobs and Wozniak. Ultimately, he got … Read more
Stephen Greenspan, is a psychologist and author of the book “Annals of Gullibility: Why We Get Duped and How to Avoid It.” Greenspan’s book was published in 2008, and uses events like the Trojan Horse, Iraq and the inability to find weapons of mass destruction, and the faulty science with cold fusion as examples to … Read more
In December of 2009, the Wall Street Journal ran an article titled Best Stock Fund of the Decade. For the ten year period from 1999 until 2009 the CGM Focus Fund on average gained 18% per year. Achieving 18% per year returns would mean an investor could double their money every 4 years. As an … 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
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
In Ken Fisher’s book Markets Never Forget, But People Do he presents two tables as shown below. The first table shows below the historical effects of past bear and bull markets and their durations. As you can see historically since 1929 the longest bear market was from 1937 to 1942 about five to six years, … Read more
I know market timing is considered a bad word in investing, but like it or not it matters. Below are screen shots from a the blog The Fat Pitch by Urban Carmel and his article titled When “Buy and Hold” Works, and When it Doesn’t.” He performed a study of long term time periods using … Read more
Active Investment Management: Active management (also called active investing) refers to a portfolio management strategy where the manager makes specific investments with the goal of outperforming an investment benchmark index. Passive Investment Management: Passive management is the opposite of active management in which a fund’s manager(s) attempt to beat the market with various investing strategies … Read more