Become a BetterInvestor's 220Best InvestmentArticles 2016

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This content is for information purposes only. It is not intended to beinvestment advice. Readers should not consider statements made by theauthor(s) as formal recommendations and should consult theirfinancial advisor before making any investment decisions. While theinformation provided is believed to be accurate, it may include errors orinaccuracies. The author(s) cannot be held liable for any actions takenas a result of reading this article.

The Become a Better Investor Team doesn’t necessarily endorse anystocks or shares mentioned in the articles or the author of such articleslinked to and summarized in Top 5 of the Week and cannot guaranteethe accuracy of its information.

Become a Better Investor'sTop 5 Bloggers 2016Top 5 of the Week is a summarized collection of financialinvestment articles that we like and think you might like too. Asthe Become a Better Investor's Top 5 Bloggers 2016 list showedyou, there are some excellent writers out there that can help youBecome a Better Investor.

This eBook includes summaries from the best 220 investmentarticles in 2016.

"Beating the Market Is Easy…

…just understate its performance." By not comparing S&P 500 returnsincluding dividends it's no wonder investors look like savvy stock pickersagainst the statisticsBy ignoring one of the two ways to gain return (price gains anddividends) within your benchmark you are demonstrating an unequalcomparisonThe Securities and Exchange Commission requires mutual funds toinclude dividend income in their performance dataBut beware, not all financial advisors and investment pros play by thesame rules

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The Flaws in Our Decision Making Skills

Being clever and making smart decisions are not automatically linked; infact, there are times where being too smart prevents you from makinggood choicesHigh intelligence actually allows us to kid ourselves with far-fetchedreasons for why things happen—especially when it comes to justifyingour own actionsSmart people are convinced that it takes a complex solution to solvecomplex problems and struggle to get past that ideaTrue brilliance is conveying challenging ideas in the simplest manner

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Today's Fund Industry Broken Down

Index funds vary from provider to the indexes they're based on and fromthe tracking errors involved to the expense ratiosIt is trading costs that differentiate one index fund from anotherSharp investors have moved away from costly active managed funds infavor of the cheaper low-cost index funds to outperform marketaveragesBefore, an increase in incoming assets had a negative impact and thefund would start to lag, but now index-fund providers are bolstered bystrong sales

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How Market Forecasts are Self-Defeating Prophecys

Markets (and history) are level two chaotic systems: they reactunpredictably to any predictions made about themIf investors act upon share price forecasts, they can drive the value up inan entirely different manner making the original forecast null and void—a self-defeating prophecyPredictive models, at best help us make informed guesses, but eventhese, as the recent results of the general election demonstrate, may notalways be right

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The Future Is Uncertain That's For Sure

Whatever your political stance you should never let politics weigh in onyour financial decisionsGiven that a recession or market crash is always within the boundariesof possibility anyway, one or the other could happen with or withoutTrump's presidencyTo deal with the inescapable future volatility which the recent resultswill undoubtedly surface it is far better to be prepared than spend timeon predictionsAnd bear in mind, one person or party cannot rule over the US stock andglobal markets

Do you think Trump's presidency could lead to a stock market bubble?

Share your thoughts in the comments section belowRead Full Article

Investors Are Abandoning Active Investing

Active managers are actually closet indexers; they buy stocks based ontheir benchmarks—the same as an index fund worksSticking close to the benchmark is an act of job preservation; averageperformance is better than risking major underperformance as a fundmanagerAnd doing this process by buying passive funds that are cheaper thanactive closet-indexing funds makes more financial senseSo rather than expensive passive investing investors are simply choosinginexpensive passive investing

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Comma.ai: A Disruptive Start-Up Set For Success...

…but who fell at the first hurdle because they failed to properly assessthe risks of the market they facedFamed hacker George Hotz's company cancelled the launch of their self-drive system due to a 'Special Order' demanding more rigorous testingDespite warnings from Tesla about the difficulty of achieving truemachine autonomy safely they failed to listenSeasoned investors should note this lesson too; when looking forpotential tech investments, remember even disruptive tech can fall flat

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The Wall of Worry Is Rebuilding

A clear indication that we're in a bull market at the moment is that themarket is becoming increasingly cautious; the "Wall of Worry" iscertainly being rebuiltWith current global and political events as they are and given thepessimistic mood, it is surprising that there has been only a modestpullback in the market overallContrarian analysis though is only a short-term market timing skill—these bearish market timers can so quickly turn bullish again too

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Why All-Time Highs in the Stock Market Shouldn'tMake You Nervous

Investors start to get nervous when it looks like a high is approaching asduring early-2000 and late-2007 the S&P 500 slashed in half afterrespective market highsAll-time highs don't happen very often and there's usually extendedperiods of time between them following bear marketsThey're a natural occurance in the market and though there are timeswhere stocks have performed negatively, "most of the time marketscontinue to rise from all-time highs"Only hindsight ever offers perfect 20-20 vision

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It's Not the End of the World Just Yet

The kneejerk reaction that occurred in the stock market this week wasjust that, as with Brexit it recovers from these type of eventsWhile on the surface it looks like a flash crash, that is in fact statisticallyimprobable, it is just an emotional reaction to the politicalcircumstancesMarkets are like people; they cannot be scientifically modeled orpredicted; only with hindsight can we truly understand and analyzebehaviorThe situation is what it is, and we are "off the lows” at least

What do you think Trump's presidency means for the markets? Share

your thoughts in the comments section belowRead Full Article

There Is No Such Thing as a Passive InvestorAnymore

Low-cost indexing has been a game changer in modern investing; theexpansion in the index fund field allows investors to track a variety offunds nowThis has led to the myth that passive individual investors outperformactive money managers as index funds are surpassing stock pickedmutual fundsIt is the distinction between active vs. passive investing that is stirringconfusion as most 'passive' investors actually make plenty of 'active'decisions about their portfolio

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Collective Wisdom Making Market Predictions

The ‘Reproducibility Project’ involves a group of economistsexperimenting to determine if they can make accurate predictions onthe 'future' of the marketWithin fake mini Wall Streets, the group buy and sell ‘shares’ in anupcoming event and the share price demonstrates the collective wisdomas to whether it will happen or notThough these prediction markets are not foolproof, the forecasts havebeen correct 71% of the time—and they believe there are lessons to learnfrom the times they're wrong too

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Another Recession Is Coming? So What?

Economists are predicting the probability of another recessionhappening within the next four years is nearly 60%Given that during the 20th century there was a recession on averageonce every five years this is highly probable—this is mostly just aprovocative forecastHaving failed to predict the start of the three most recent events (1990,2001, and 2007), it's not worth getting too concerned with theirforecasting skills anytime soon

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Not All Technical Analysis is Nonsense

Technical analysis is the attempt to forecast future stock movements byanalyzing the data from recent trading activityMany believe though that the driving force behind share price isearnings only, but actually, sentiment is a motivating factor, and it canbe taken into accountIf you consider technical analysis as a useful tool for evaluating riskrather than an attempt to predict the future, it can work favorably foryou as an investor

Do you believe in technical analysis? Or is it forecasting nonsense?

Share your thoughts in the comments section belowRead Full Article

Charlie Munger; Solving Problems With a Checklist

Before any new investment; evaluate risk, above all the reputational risk,strive for objectivity and rationality in your assessmentPreparation is essential; never stop learning and asking "why?"—and behonest with yourself about your own limitsBecome an efficient business analyst and learn to allocate your assetswiselyBe patient and act decisively, and always be prepared to adapt to newcircumstances

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The Key to Long-Term Investment Thinking

The most profitable strategies for investing are all about long-termthinkingThe power of compounding interest works at its best over a long time;decades, not weeksTo optimize your long-term strategy though consider it as a group ofshort-runs, and learn to manage and tend these effectively

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What "Napkin Sketch" Tweets Can Teach Us AboutOur Finances

Carl Richard's drawings aim to simply demonstrate the differencebetween what you should do with your money compared to what youreally do with itThis is known as the "behavior gap," such as how being open and talkingabout money is healthier; how it can lead to better, more informedfinancial decisionsOr learning that spending money to save money is a counterintuitivestrategyAnd being able to visualize the area between things that matter andthings we can control to set our focus on

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Are You Financially Stable? Ask Yourself…

What is your debt to income ratio (DTI)? The lower your DTI, the better;36% is a stable averageHow much ready cash do you have available or is it tied up ininvestments? 3 - 6 months of income is a good figure to have a safetycushionCould you handle an unexpected loss in pay? Consider what otheroptions you have available in case your income is halved for any reasonDo you have appropriate insurance? Ensure you're covered for alleventualitiesDo you have positive net worth? Adjust your expenses if not

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Indexers; How Do They Do It?

Active investing yields more short-term financial gains butunderperforms against the market average when you compare thereturns after fees and taxesThere are managers that occasionally beat the average, but the odds offinding one who can achieve this consistently are improbableIndexing is more economical because it is an asset picking scheme thatinvolves fewer fees and taxes than active investing

Are you an indexer or stockpicker? Do you agree that one beats the

average more than the other? Share your thoughts in the comments

section below

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Both Are Needed for Long-Term InvestmentSuccess…

...but the two factors differ; understand the difference between bothinvestment management (IM) and financial advice (FA) to succeedIM encompasses asset management, portfolio construction, both riskmitigation and tolerance within the stock market, as well as buildingyour wealthFA is about forming a plan and setting goals to build that wealth, bycreating systems to achieve this, as well as managing and adjusting thatplan during any market disruptions and life events

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Stock Splits Are Dying Off

A 2:1 stock split leads to twice the number of shares, but normally alsosplits the per-share price in half— therefore, the per share valuedecreases as the share numbers increaseOther than 2009 and 2010 following the wake of the financial crisis,2016 is the only other year to experience such a low number of stocksplitsThis "death" is not necessarily a bad thing; it may be an indication thatthe market is learning the difference between stock price and businessvalue

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Lessons Learned from Stock Market Disasters

Tailoring your portfolio to be black swan event resistant—a portfoliobuilt out of fear can be just as damagingDon't act impulsively following these disasters; tread carefully else "thecure can be just as bad as the sickness"Investors without a bigger long term investment plan in place will be themost vulnerable during these once-in-a-lifetime occurences

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It's Not Just About Being Right or Wrong

Investing is also about risk and measuring the consequences of youractions—to assess this always ask, “What are the consequences if I amright or wrong?”In this scenario, actively doing nothing will be more beneficial to yourinvestments than trying to time the market to your advantageTransaction costs are another reason to avoid this practice, as is thepsychological burden of attempting to time your trades just right

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“Front-Row Investors Run the World...”

“...while those in the rear are barely surviving.” Over half of theAmerican population couldn't find funds for a $500 emergency ifnecessaryA third have nothing saved towards retirement and obesity numbershave tripled since the 1970sThe contrasts between front-row investors (those with managedportfolios, pension funds, and financial planners) in comparison to thosein the back-row (living paycheck to paycheck, surviving on payday loans,etc.) is incredibly stark

Are you in the front or back-row of investing? Share your thoughts in

the comments section below

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It's Hard to Tell the Difference Between Two Simplebut Opposite Views

Tailoring your portfolio to be black swan event resistant is not the wayforward—a portfolio built out of fear can be just as damagingUnderstand the difference between a contrarian and a cynical stance;one is choosing not to go with the crowd, the other is always believingthe crowd is wrongAsk yourself if you're motivated or incentivized? The first drives you fora larger cause; the second drives you only for reward—which may getyou into trouble when investing

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“Great Success Combines Skill With a lot of Luck”

Few activities involve just luck, if you can throw the outcome of a gameon purpose then skill is required to win it, if you cannot then the game isdriven by luck aloneBut you cannot rely on one or the other alone; the two together arenecessary to succeed—especially when it comes to investingMore and more data is becoming widely available but the level of skill tointerpret it is varying; if investors merely copy one another then anyoutcome will be luck derived only

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What Do Great Investors Have in Common?

Great investors are usually also great writers and effectivecommunicaters; the ability to both understand and clearly convey datais an overlooked investing skillOther investors take faith in their skilled advice during rocky timesbecause they reassure and offer dependabilityThe capability to successfully manage investors should be appreciated asmuch, if not more, than the capability to manage a successfulinvestment company

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“Maximizing Shareholder Value Was the DumbestIdea in the World”

Cost-cutting to appease shareholders is often in the form of wages,investments, supplier costs, and employeesResulting in job losses, company finance deficit, broken vendorrelationships, and irreparable damage to infrastructureAnd the cause of much anger at those leading the charge—corporatemanagers—to place shareholder value at a premium at the expense of allelse

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How the Investing Industry and Markets HaveChanged in 50 Years

The New York Stock Exchange trading volume has risen over 1,500times; from $3 million in listed stocks a day to $5 billionThe internet has changed the way investors make investing decisions;investment research is now shared globally within seconds by industryexpert analysts50 years ago, zero Chartered Financial Analysts worked on Wall Street;now there are 135,000, and a further 200,000 studying for the exams tobecome one

What do you believe is the biggest change in the investing world over

the last 5 decades? Share your thoughts in the comments section below

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Pride Can Be Dangerous, Humility Costs Nothing

It's dangerous to be too embarrassed to ask for more information wheninvesting—asking questions could save you time and money in the longrunWhen it comes to finances, there is no such thing as a dumb questionBe humble and admit if you don't know something; that humility willprovide a "vital layer of protection" between you and potential mistakes

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Warren Buffett's 20 Punch Card Guide to StockPicking

Warren Buffet suggested that if you could only build wealth over thecourse of your lifetime with just 20 investments; you would be far moreselective in your choicesMost investors struggle to follow this investing wisdom because they areincapable of not acting; jumping at inferior stocks rather than waitingThe biggest advantage of the 20 card punch test is that by avoidingshort-term mistakes, you’re in a better position to exploit superioropportunities as they arise

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Uncharted Territory for Interest Rate Levels

Equity risk premium is the expected return on stocks above the risk-freerate e.g. a 10-year treasury bond that has been about 4.5% annually sincethe 1920sYou are never guaranteed to receive this high rate though as it fluctuatesover timeAnd there is no historical precedence that shows a relationship betweeninterest rates and stock market performance; not while they're at thecurrent record lowEssentially; anything could happen

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Uncover the Mystery Behind Hedge Funds

Rather than "hedge funds" they should really be called privateinvestment partnerships; where the investors are limited partners andthe funds are not publicly tradedThe fund manager (or general partner) collects all the invested moneytogether and directs it towards investments for the limited partnersThe infamous long-short strategy; if you're long you make money if theprice goes up, and if you're short, when the price goes down

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The Rise of Big Data and Artificial Intelligence

Retail investors are now able to access the same information asinstitutional investors thanks to the growth in data mining; affectingprofessional firms' who will lose their servicesBig data will also improve the financial industry's ability to tailor theirclient's portfolio offering a more personalized serviceAI's potential to outperform humans by analyzing and collecting datamuch quicker has lead to more investing strategies relying on them fordecision-making

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Political Uncertainty = Market Uncertainty

While presidential debates can affect the stock market short-term, theyrarely make any serious long-term impactsThey can, however, affect the way investors make their decisions aspolitical uncertainty risesStrong performances from candidates are likely to boost marketvolatility more than weak ones but just as influencing is the state of theeconomy at the time of debate

Have you seen any direct impact on the market following the

presidential debate? Share your thoughts in the comments section

below

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“It’s Better to be Roughly Right Than PreciselyWrong”

Overconfidence and 'smarts' can be a dangerous combination forinvestingMarkets evolve, change and adapt; unforeseen events can have hugeramifications so don't expect the future to always play out like the pastIntelligence is understanding that market cycles go up and down,wisdom is the decision not to react to the volatility

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Make Money Instead of Predictions

Investing by trying to predict the unpredictable is no more thanspeculationAnd yet, investors still speculate on stocks despite knowing that pastperformance is not an indicator of future returnsDon't attempt to predict the market; you'll make more money bydeciding not to take action than by trying to time it

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Learn to Ride the Ups and Downs of Cycles andBubbles

Trying to spot bubbles is too difficult for the average investor, as onlyhindsight allows us to see them accuratelyThere is no way to precisely measure how far markets will go up and if—or when—they might turnBubbles incur a permanent widespread loss of capital, but if you'repatient and humble with a long-term view for investing, cycles can beridden outTherefore, if you consider 'bubbles' as cycles—the inherent ups anddowns of the stock market—"the investing world becomes a lot lessscary"

Bubbles or cycles; learn to spot one or ride the other? How do you deal

with them? Share your comments in the section belowRead Full Article

What a Company's Free Cash Flow Can Tell You

Free cash flow is "basically taking your cash from operations,subtracting capital expenditures"What's leftover for distribution is often a good indication of potentialfuture growthInvestors should always check out a company's free cash flow situationbefore they decide to buy in or not

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Savings Bonds; A Powerful Addition to YourPortfolio

Though there are catches involved, 20 years of investment in Series EEsavings bonds guarantees you twice the amount of money you put in atthe startThis equates to a 3.5% return yearly but be aware that the bonds aren'tliquid or inflation-protected and an investor can only invest $10,000 ayearAnd you run the risk of losing your money if interest rates go up and ofnot being paid back as they aren't from the US Treasury

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A 1980's Real Estate and Stock Market Bubble ofEpic Proportions

During the 1980's in Japan, land value peaked with sky-high valuationsand share prices grew 3X as quick as corporate profitsInvestors can take away two sets of lessons from this bubble

The wrong lessons; that there are times in the stock market where buyand hold doesn't work, and the US is headed in the same direction asJapan

The right lessons; that investors underestimate market swings,diversification is critical; avoid home country bias and investing all in asingle asset class

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Don't Be an Expert at Success But an Amateur atFailure

Research shows that investors react twice as sensitively to losses as theydo to gainsInvestors will have experienced a portfolio drop of 50% or more twice inthe last 16 years, and the odds are that it will occur againInvestors need to steel themselves for losses and learn from failures orbe in danger of being "Fragile Perfects"—those who can't deal with badnewsBe optimistic too; if you can't see a light at the end of the stock markettunnel then why invest at all?

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Successful Investing is About the Portfolio ProcessNot Stock Tips

Those looking for easy wins in the stock market seek out equity tips andreject the idea of hard work that a stock portfolio with better chances ofsuccess requiresBut the odds of finding that once in a lifetime stock to change your lifeare extremely lowInstead, a successful investor will learn more about business and themath behind financial analysisThey will also seek out others who work hard at investing, andunderstand that there's no such thing as a shortcut to making money inthe stock market

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Don't Worry If You Weren't Invited to the HedgeFund Party

Hedge funds are investments that pool capital; designed to protectinvestors from market uncertainty by using a number of differentstrategies to generate returnsDespite 26 yrs of outperforming, hedge funds have taken a major U-turnwith returns of only 2.6% in the last 5 yrs; which doesn't compare well tothe 13% average in the US stock marketHedge fund investments have ballooned since 2000 from $189 billion to$2.8 trillion, so it's "too much money...chasing too few wrongly pricedassets"

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Don't Rely On Luck; Invest With Skill

Sometimes it's right to bet on longshots if the cost is low, and sometimesit's right to bet if the cost is highTo succeed at either understand when the right time is for both; knowthe odds and the payoutIt's always worth taking a step back from your inside viewpoint; look atyour investments and portfolio from an outside perspective for balanceStay on the "planned, rational, organized, act-don’t-knee-jerk-react path"with index funds rather than being tempted to pick and choose equities

Share your investing insights in the comments section below

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Horse Race Betting Behavior Value Investors CanLearn From

Use the equation Value = Probability x Price for investing success whenconsidering potential stocks; rather than just choosing ones you like thelook ofDon't give up on your strategy even if it's unpopular to others and riskierbets seem more excitingToday's investor and horse player share another common point; thatthere's no better time than this century to be involved in the stockmarket and the race track

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Forecasting Will Dupe You Into Believing YouShould Act…

By analyzing historical performance of the stock market you can alwaysset certain expectations for the future, but forecasting when thoseevents will happen is very different12 recessions have occurred since the end of World War II; whichaverages to two every ten years, so expecting the pattern to continueputs you in an informed positionBut it's important not to let it affect your behavior; forecasting the nextrecession and trying to time the market in advance will only lead toregret

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Mid-life Money Revelations

Building wealth is about more than living below your means; it's aboutdriving your career prospects and seeking opportunities to earn moremoneyProperty hasn't always been the best form of investment but it's a greatway to plan out your finances, and making bigger payments willimprove your returnsTime is the best investment you can spend money on; your family is themost important asset you have

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The Research Behind Cognitive Biases in Investors

Cognitive biases affect our behavior on a day-to-day basis and alsoinfluence our approach to investing

Anchoring bias; when making decisions (i.e. choosing stocks) we focusheavily on the first piece of information provided and don't makeobjective choices

Loss aversion; monetary losses affect us much more painfully than anypleasure we get from receiving an equal amount in returns

Narrow framing; investors make shortsighted decisions and don'tconsider the context of their entire portfolio

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5 Key Investment Principles Whether You're New toInvesting or Not

By diversifying your investments across different global sectors, yourportfolio is better protectedThe best retirement nest egg is constructed with patience andperseverance“It's folly to try and day trade your way to success,” think long-terminsteadBe aware of the money you're spending on financial costs—great returnsmean nothing if you're hemorrhaging money on fees

Which investing principles do you live by? Share in the comments

section below.

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Growing Enthusiasm For Emerging Markets

With the growth of emerging markets (EM) maintaining steadily,investors are finding them increasingly attractiveOne draw is the "lower-for-longer" interest rate environment, andinvestors are extending their risk appetite to get involved$26 billion has been invested in EM equity exchange-traded and mutualfunds since February this year showing a marked interest in the assetsglobally

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Fantasy Investing; "Betting on a Future That is NotLikely to Happen"

There are financial consequences of subjecting to fantasy as it'scompletely removed from the reality of circumstancesLike how historically the market has made 10% a year on average, so Ishould expect to make 10% each year; uncertainty is the only certaintyin the stock marketGold is a good investment when all else is failing; historically, people buygold when stocks are falling, but that does not make it a good hedgeinvestmentAnd that money is everything—it only has what value we give it

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Don't Poke A Sleeping Bear

Just because the stock market is "sluggish" don't be tempted to playaround with your portfolio to make life more excitingIn the last month, the fastest growing assets were exchange-tradedfunds with over $900 million coming into play by funds bettingspeculators probably seeking a thrillBe self-aware and drive back any boredom itches you're feeling; don't betempted out to play by these highly volatile funds

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Hedge Funds: Fact Vs. Fiction

People's vision of hedge-funders activity is often very far-fetched fromthe reality, and much more debauchedMore accurately, hedge funds have actually been underperforming incontradiction to what they're supposed to do through financial marketturbulenceHedge funding is arguably "more PowerPoint than power suit, power tie,and power steering"

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New Momentum Findings to RevolutionizeMomentum Investing? Not Really…

In testing momentum, portfolios are often formed on stocks’ past 12-month performance minus the most recent monthNovy-Marx (2012) wrote that portfolios formed from sorting on returnsfrom 12 to 7 months before the current month created higher returnsBut before you decide in favor of 12_7 momentum, Goyal and Wahal(2015) did out-of-sample tests to trial Novy-Marx’s theory finding noevidence to support it outside the USConclusively, just as investors disagree on the works of momentum, sodo the academics

Which side of the fence do you sit on? Share your comments in the

section below

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"Everyone is a Closet Technician"

During times of market volatility this becomes truer than ever, peoplebegin to study the prices rather than the motivation and influencesbehind themWhile prices show an accurate account of what's going on it's not nearlyas interesting to the media as speculating over the causes as that's moreopinion basedFrom these speculations the media can create their headlines, someinvestors react irrationally, and technicians start to look for the real'truth' in prices—which is not always there

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Statistics That Fib and Fool Us

"The secret language of statistics, so appealing in a fact-minded culture,is employed to sensationalize, inflate, confuse, and oversimplify," DarrellHuffWith information in vast supply nowadays you have to be extra smartand examine beyond the surface of evidential dataSome people have been employing similar tactics to suggest that S&P 500gains in the last eight years are "Fed-induced"While there is some truth in this, it's not as simple to suggest only onevariable has that much influence

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Balance Your Portfolio

Diversifying your portfolio is advised so as to avoid your investmentsbeing in a too concentrated position; heavily focused in one sectorincreasing your risk levelInvest in a range of asset classes—stocks, bonds, and/or cash— toachieve this; according to your risk toleranceFor low-risk options, be more conservative with your investment choices(bonds) or choose riskier equities if you can handle the volatility in favorof potentially higher returns

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Still No Easy Way of Understanding and ComparingFinancial Advice Fees

Despite landmark reforms in the financial advice market since 2012, theaverage cost of fees has seen no significant change at just 2.56% from2.86% four years laterWith the market as it is today, getting sound financial advice is a majorworry for investorsWith no tools to accurately compare costs for advice and investment, it'shard to foresee the compounding effect over time of percentages thataren't relative to their returns

Have you been victim to hidden fees? Or 'low' percentages that build up

over time? Share your comments in the section below

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Sleep Soundly; Manage Your Risk Profile

The level of risk you can handle will influence all your major investmentdecisions—be self-analytical to discover what yours really isA good financial advisor will help you review and evaluate your personaland financial circumstances to understand your risk toleranceThere is no such thing as a standard risk profile as everyone is different;reassess yours every few years as things develop and change in your lifethat weighs in

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Just As In Long-Distance Running, So Too InInvesting

Setting achievable personal goals is highly motivational; it creates asense of purpose for both training and running a marathon as well aswhen building wealthFocus on your own race and investments; concentrating instead on yourneighbor's success will inevitably lead you to trip and fall—in runningand investingFind those who will support your goals and help you reach the finish line;a skilled advisor can help during both the high and low points

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Asset Management Costs are Declining; Indexing isthe Catalyst

Despite advances influencing productivity gains and prices declining,the costs in the financial services sector of 1900 amounted to the samealmost a century afterToday, the rising efficiency of the index fund has begun to affect assetmanagement by lowering costs and feesNot a new investment strategy by any means, the first index fund beganin 1976, it is still in the "early stages of adoption" but growing steadily inpopularity

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“Financial Advice Ought to be Evidence-Based…Duh!”

The essentials of evidence-based investing are that all financial adviceshould consider the client's needs and not be given unless supported bygood evidenceBut judging what evidence is worthy is not that easy; it can go indifferent directions, be difficult to find the right sort, and can be just thewrong type of evidenceOur bias-blindness leads us to find evidence that suits our theory ratherthan be objective—be extra analytical of both investment processes andsupporting 'evidence'

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Stock Market Minefields to Avoid From The USA'sFinancial History

The stock market is in a bull market 85% of the time: lasting longer thanbear marketsNever buy stocks or financial products during market peaksThe only thing you can be certain of in the stock market is uncertainty,but that's not a good reason for not investing

What valuable lessons do you believe stand out in the history of the

stock market? Share your comments in the section below

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Value Lies in Future Earnings

Value stocks don't necessarily mean cheap, and growth stocks don'tnecessarily mean they're expensive—both investing strategies are not asblack and white as thatValue investing works better if approached three-dimensionally, byconsidering value, quality, and growthThough not as easy to judge quantifiably, quality and growth willimprove your value returnsGet a bargain by buying stocks at a discount of their worth butunderstand that's not the same as 'cheap'

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Gap Risks: One-Out-Of-A-Thousand Events

Gap risks occur following black swan events (such as Brexit in June thisyear), they're those significant drops in share prices overnight—uncommon, but their consequences can be direBefore Brexit, in the last 66 years, only two other events have affectedthe All S&P Index for market losses over 10%; the 1987 and 2008 stockmarket crashesFor protective measures against such events consider reducing yourexposure to riskier assets by holding more cash and bonds, buying putoptions, hedging your equities, and portfolio diversification

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When Value Investors Should Fear the Stock Market

For the long-term investor, the periods during which you should stepback from the stock market are few and far betweenRetreat only when stock prices become implausibly high, during severe—almost apocalyptic—recessions, or when large numbers of people arefleeing the country (a sure sign of economic impairment)The major factor on the horizon to watch at the moment is if interestrates start to rise as happened in the 70s and 80s: which may indicateseverely weak returns in the future

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Can Stop-Loss Rules Tame the Momentum InvestingRollercoaster?

According to Jegadeesh and Titman (1993) in the paper Intermediate-Term Price Momentum, it is possible to use simple stop-loss rules to haltor minimize crashesBut it would require daily stock position analysis to work and would bean unfeasible process for an average investor to performOn paper, the theory seems sound but doesn't account for all thecomplications in practical execution

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Equity Hedging Uncovered

Attempting to hedge equity investments is the equivalent of trying toaccurately hit a moving target while blindfoldedAs successful equity hedging is all about accurate timing, it does notnecessarily mean increased returnsIn theory, it should allow you to make returns risk-free but as a process,it's costly and doesn't work well enough in practice to warrant theexpense—though there are companies and people out there who do itsuccessfully

Do you disagree? Have you been successful at hedging equities? Share

your comments in the section below

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Elon Musk and Warren Buffett: Play Spot theDifference Between the Two

One is renowned for his Silicon Valley start-up companies out theredisrupting long-standing industries and the other for being one of themost successful investors in the worldThey both drive companies that are making inroads into carbon-freeelectricity, both make returns with creative fund schemes, and both aredecisive leaders in their respective fieldsLastly, their personalities and brands are both inherently linked with thecompanies they run

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"Do Savers Deserve a Risk-Free Return?"

In recent decades, savers have experienced the rarity of high realreturns in risk-free instruments; and started to expect as high rates asduring the abnormal period in 1980-2007 of rates at 2.1%With the economy in the position it is in, of "stagnant productivity andweak output," it is not viable to continue these exceptional returns onrisk-free savingsThe situation should urge us all to boost the declining output and lack ofearnings in recent years, to be able to once again enjoy higher returnsfor savers in the future

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Great Investing Attributes

Be skilled at mathematics and accounting, be able to grasp value, andunderstand business strategiesThink about the odds effectively and compare risk as well as differentinvesting approachesBe open-minded and well-read; test hypotheses and always judge whereyour information is sourced fromBe careful of behavioral biases and know your limitations

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Billionaires' Advice: "Sell Everything!"

Many billionaires—with Warren Buffett as the exception to the rule—areall suggesting we should exit the stock market in today's currenteconomic climateThough it seems counterproductive to argue with someone richer thanyou; there's an argument that you shouldn't trade on the advice of abillionaire unless you are oneHistory has shown us that listening to market advice from the wealthyelite is not always a sound approach for those that have very differentgoals and financial plans

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Misleading Statistical 'Truths'

As Benjamin Disraeli—Prime minister of the United Kingdom (twice)—once said, "There are three kinds of lies: lies, damned lies, and statistics”By altering the time period, they are not showcasing lies about returnsdata but are easily distorting the truthBe sure to do a thorough investigation into statistics, "cherry pickingdates" is a great misleader when it comes to adjusting the truth aboutstock returns

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The Future Rise of Interest Rates; Will they or Won'tThey?

With interest rates at an all time historical low of 0.5%, the concern forthe future is how long before rates return to normalized levels or if thatwill even happen at allIf the risk-free rates were to change; owning a lower risk environmentfor investors to own then investors would move away from riskierequitiesContinued low rates could have long-term negative effects on stockmarkets, but the Federal Reserve won't raise rates until it looks like theeconomy can cope

Do you believe rates will eventually rise? Or continue at this all-time

low? Share your comments in the section below

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Ethics or Returns? That Is The Question

More concerned investors are turning to socially responsible investingwhich has developed to evaluate a company's environmental, social, andgovernance performanceBut studies show that portfolios which contain sin stocks (those alignedwith controversial issues) tend to outperform those that sacrificebroader diversification in favor of ethical responsibilityUltimately, therefore, it is a personal decision to weigh up the valuesbehind ethical investing over any financial costs

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More Slices In The Alpha Pie

Between Jan 2005 and Jan 2013, 57,512 brand new global funds werestarted; it is this constant flow of new funds that are affecting the excessasset flow from themThe problem is the grass is not always greener—with so many options tochoose from it's difficult to yield anything above average resultsWith all these distractions around, it's worthwhile to seek financialadvisors who can remain blinkered to them; choosing instead to focusand steer their clients towards better returns

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Current Politics; A Refresher Course in Risk

With the world watching with baited breath to see who wins the WhiteHouse, it is surprising to learn that political risk isn't the dominatingfactor for investors nervousnessMarket risk is still investors' biggest concern; to allay your fears, holdcash as an asset, fund your emergency savings, or check out micro capsor emerging-markets bondsRather than try and anticipate a Trump or Clinton victory; work out yourlargest financial fear then play to that specific risk

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Advice From The Investing Greats

Irving Kahn: In a financial crisis, ignore noise from the media and buy"beaten-down, high-quality stocks"

Roy Neuberger: Buy stocks during a passing negative period

Sir John Templeton: Buy when others are "despondently selling" and sellwhen they're "greedily buying"

Benjamin Graham: Mr. Market can be a volatile partner to do businesswith, thankfully he takes no offense if you ignore him

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Female Investors Come Out On Top

Over a seven year period, studies showed that female investorsoutperformed males by 2.3%Being naturally risk averse, investing allows women to play to theirstrengths, and so while they fall behind slightly in an up market theyoutperform the rest of the timeMen tend to be less humble than women; this "overconfidence" is not anasset as much as a danger for investors

Do you agree otherwise? Are you a humble male investor or a risk-

seeking female? Share your comments in the section below

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The Index and Dividend Investing Combo

Index investing is using index funds to build a passive investmentstrategy, while in this instance, dividend investing refers to buyingindividual dividend stocksUse index investing as a holding pattern and benefit from its widediversification, and purchase high-quality dividend stocks during timesof investors' panic; until then do nothingWhile both approaches complement each other, the most crucial tool forsuccessful investing is to have an investment plan in the first place andfollow it

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Smart Beta Misconceptions

Smart beta generates alpha: Instead, return comes from rewardedsystematic risk factors besides the market factor, which can't be calledalpha

That smart beta means high turnover: Though turnover is likely to behigher the manager and strategy can deal with it so it comes "withinreasonable bounds"

A good factor index requires a sophisticated scoring approach: This isnot necessarily the case for smart beta, it can be adding risk as theproprietary models might be the result of data-mining and may not work

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Investing: It's All Psychological

There is no mystical secret to successful investing just practice the art ofcareful, rational decision-makingConviction can be an indicator of overconfidence, as it is rooted insubjectivity—be objective in your observation of market realities insteadThough rationality isn't sexy; it is key to investing and trading success

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Active Management: Alive and Kicking

Active funds underperform not due to lack of skill, but because ofsubsequent portfolio management decisionsUnderperformance comes from “portfolio drag,” such as to much moneyunder management, benchmark track, and over diversificationWithout portfolio drag, fund managers can achieve outperformance,look out for these truly active funds to invest in

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Huge Earnings But Average Return From CEOs

There are endless influencing factors that affect whether a company'sstock performs well; the economic environment, inflation and interestrates, and global events, to name but a fewThe company itself and its market performance can be credited two-thirds of any price movement, while the market itself should receive40% creditCompensating in salary for what is arguably market-based performancemakes little sense and a reform in pay policies should be called for toreflect this

Are you a CEO? Do you believe your earnings reflect your returns? Leave

a comment in the section below

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Share Safety is Becoming Expensive

Given recent events, investors expect to start looking for lower-priced,alternative, safe assets to invest in, moving away from “risky shares” butat the moment all asset types seem overvaluedCompanies with long-term demand and ‘safe’ profits are highly soughtafter, and so their prices keep rising despite expectations that they can’tpossibly continue that wayHigh share prices are making it increasingly difficult for investors todetermine whether they are worth the extra money; causing traditionalvaluation methods to be overturned

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The Value and Momentum Power Mix

Despite individual research on both strategies for the past 20 years, noone has ever uncovered what the combination of Value and Momentumcan do when working togetherSome investing approaches occasionally work in one market and notanother, but there is evidence to show that both Value and Momentumfactors work in all marketsBy employing the two strategies, you gain from their negativecorrelation; due to lower risk and higher returns, leading to a superiorSharpe ratio

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Keep Emotions Out Of It

Sadly, there will always be cataclysmic events that rock the world stage,but they can’t be predicted and trying to strategize for them financiallyis futileHistory has demonstrated time and again that geopolitical events do notalways have the expected response in the stock market; showing highswhere investors would expect lows and volatilityDon’t let your emotions following these incidents influence anydecisions on your portfolio

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Expectations Vs. Reality

It’s unrealistic for investors to expect their fund managers undividedattention, to never lose their money, and not be making anything frommanagement feesThe reality is no fund manager can continually outperform, they all haveother investors to balance time with, and fees don’t mean fat bonuses allthe time but probably include running costsLook for a fund manager who mitigates your risk appropriately, canlearn from losses, and whose fees reflect the true value of the fund’s“bottom line”

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Time Isn’t Money; It Never Returns

Consider the time spent by some investors watching, assessing,calculating, and above all speculating (basically gambling) on the stockmarketTime which is misspent; investing is most successful as a long-termstrategy; short day to day occurrences mean nothing in the grandschemeTrying to time the market and pick stocks rarely works for any but thelucky few, and as you can’t outsmart it, steal back that time spentwatching it and use it for something more meaningful

Do you watch the market regularly? Is it a habit you picked up from

your parents? Share your comments in the section below

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Fool Me Once, Shame on You

Be sure to do your due diligence on “good value” assets before investingin ones that look great on paper; they could trash your portfolioThough backed by the US government, long-term US Treasury bondsyield minimal return in relation to the cost of inflationGiven recent events, while they look cheap, European banks aren’t thevalue asset they appear to beAvoid your portfolio being sucker punched by companies with "thesis-altering events"—look below the glossy value exterior to uncover thetruth: why these companies are cheap in the first place

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How Do You Assess Risk?

Understanding an investor’s behavior following market volatility orfinancial crisis is key to a financial advisor being able to carry out a riskprofileSome use psychometric tests, lengthy discussions, and hypothetical risk-and-return scenarios to assess how people behave when faced with thesesituationsThe goal is to better understand risk tolerance and so to be able toprovide advice tailored to the individual

Do you know your risk tolerance? Have you been through one of these

psychometric tests? Share your comments in the section below

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Are Things Really That Bad?

It’s in the 'running for office' political candidate's best interest to makeyou believe they can save the day; so the media do their best to fool youthat we’re all going to hell in a handbasketIf it’s as bad as they are making out, we wouldn’t be spending money onluxury expenses outside the household budgetThough it’s unlikely that you’ll find others to agree, the current marketshows strength through to the end of the year

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Still Original Today; “Buy Low and Sell High”

As well as being John Adams’ wife (US President 1797-1801), AbigailAdams was renowned for being a shrewd investor who built a greatfortune for herself and her familyHer keen foresight led her take advantage of a falling currency andconvert cash into bonds; five years later she made more than twice itsoriginal worthHer most valuable lesson; not to panic in times of financial crisis but tokeep your cool and see the moment as an opportunity rather than anemergency

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Wealth Wisdom From Warren

Though there’s nothing exciting about the more mundane stocks on themarket—diapers, soap and toilet paper—they are the closest thing youwill get to for reliability in long-term returnsBrand strength and customer reputation convert into shareholder valueand so into outsized investment returns as well“To err is human,” and forgiveness may be divine, but far better is tolearn from your investing mistakes and teach the next generation aswell

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Risky Markets, Risky Business?

“Country risk premiums” (CRPs) are the enticement for investing inrisky countries because as with any equity investment, higher riskimplies higher gain—but also potentially bigger lossesInvestors analyze many country specific traits to calculate CRPs; such asbond yields (and spreads), volatility, inflation, as well as any legal,political, and economic factorsRisk assessment isn’t a very accurate tool so only proceed if theinvestment becomes part of a balanced, diversified portfolio

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Bonds that are “Just Right”

Appropriate insurance will provide a better cushion than large sums ofcash parked in low-interest accounts or funds that won’t grow at thesame rate as the rising cost of livingInvest in stocks to accumulate wealth and look for that “sweet spot” foryour fixed-income assets: not too long and not too short termIntermediate-term bonds—over a long time—will provide you with aninflation-adjusted retirement income rather than just cash assets whichwill disappear once you start spending them

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Emerging Markets Promise Potential Profits

Emerging markets are countries that haven’t yet developed a market tothe size like those of the US, UK, and other European countriesMajor emerging markets include Brazil, Russia, India, China, Taiwan,Mexico, Indonesia, and South Africa; those with good demographictrends and high economic growth rate prospectsInvest in these via an Emerging Market Fund or ETFs to gain from thebenefit of investing in thousands of stocks while mitigating the risk ofbeing exposed to higher volatility and less regulated markets

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The Bond Bubble Paradox

Bubbles in markets occur by investors jumping on a stock bandwagondue to high yields by others, but bond rates continue to fall though somesay they’ve been in a bubble for 4-5 yrs nowDespite the Treasury yield at a record low of 1.3%, it seems investors arestill turning to bonds because they are concerned for safety in suchunstable market timesMore uncertainty lies in the long-term effects of low-interest rates in thefuture, as this has never happened before in financial history

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5 Years or 5 Days?

If you want to take a serious long-term strategy when it comes toinvesting you need to alter your way of thinkingIgnore ‘breaking news,’ this type of short-termism will only make youpanic at times of market volatilityDiversify your portfolio and stay the course: choose to watch five yearsrather than five days for real results

Are you a five days or five years investor? Can you keep your cool in

times of market volatility? Let's start a discussion in the comments

section below

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“50 Billion Smart Devices...

...will be connected to the internet by 2020.” If your risk tolerance candeal with the high-volatility—that comes with all new trends—thenanalyze the many fields or technologies in IoT to invest inCarry out due diligence on the companies you consider; understand thebusiness and the risks each stock will involveDon’t be blindsided by the “trillion-plus market opportunity,” do yourhomework and be rational about IoT’s investment potential

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Evaluate Your Fund Evaluation Process

Past performance is not an indicator of the future—don’t be encouragedby yesterday’s ‘winners’, the likelihood is they’ll be tomorrow'sunderperformersDon’t screen for alpha only; alpha is defined by the market model youuse and is probably just a result of risk not defined in your modelInvestors know that stock picking is luck as much as skill; the same istrue for choosing a good investment manager, and successful fundevaluation requires more than just performance screens

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Lessons from Value Investing

Keep emotions out of your investment decisions, don’t avoid stocks thatlook mundane and don’t become overly concerned about the growth vs.value distinctionDo be aware of the difference between investing and speculating(gambling) and be contrarian, don’t follow the crowdBe skeptical when considering cheap stocks—there might be a reasonthey’re undervalued—and exercise patience in your chosen valuestrategy

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Keep Calm and Carry on Diversifying

Markets can respond dramatically to unexpected events, don’t lose yourhead though too, investing is always risky, but stay the course; themarket—and your portfolio—will eventually recoverIn this current state of volatility, it’s a terrible idea to try and time themarket by selling or pulling out, whether you’re in need of the money—close to retirement perhaps—or notDiversification is the best shield for your investment portfolio; invest inglobal funds and alternative assets, such as real estate to help mitigatethe risk in future economic uncertainty

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What Happens Next?

The end of globalization? The global free trade we’ve enjoyed sinceWWII may be ending but that doesn't mean global investmentopportunities are—we may just need to hunt harder for them

The end of Western Capitalism? Investors would be better served in theuncertain dark future—and protected—by tougher but sound financialregulations, and free markets being allowed to self-correctUltimately though, Western Capitalism is beneficial for all and so, willendure, but only if we take the right steps

Is the end of Capitalism in sight or not? Share your recent experiences

following the Brexit impact in the comments section below

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The Market in Retrospect

The 1940’s was a striking era in market history; people were just rallyingafter the Great Depression only to be hit by two enormous crashes in thestock market—marking “the worst economic decade”The 2000’s—or Noughties—seeming golden in comparison, minting outInternet millionaires left, right and centerThrough to today, an age of secular stagnation, interest rates andinflation that “will never rise in the future”, and a lack of innovation, agrim outlook; but as the memo for Bush teaches us, the future is not setin stone

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The 411 on Financial Scams

Beware of ‘financial advisors’ coming out of the woodworks in yourvarious social circles—they do not have your financial interests at heart;only theirsBeware ‘financial advisors’ selling sophisticated structured products onbehalf of ‘distinguished’ firms—respectable investments will bediscovered by investors without the extra sales tacticsFiduciary advisors are more client-centric; seek one out for creditableinvestment advice

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Trendy Investment Bubbles to Avoid

ETFs based on major social trends are not capitalizing on anything shinyor newCompanies of all sizes that become collated in these ETFs will have beenbenefiting from these ‘trends’ for years already, which should reflect intheir share prices’The concept also goes against the grain—and benefits—of portfoliodiversification as focusing on a specific niche or theme will end up inyou being concentrated in just a few industries

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Forecasting Type A, B, or C?

The Foolish Forecaster: the investor who makes calls on short-termmarket movements; by extending your time horizon you increase theodds of getting a more accurate picture

The Oblivious Forecaster: makes predictions based on historical data;though it’s empirical, concentrating performance predictions on thepast offers little reflection for the future

The Probabilistic Forecaster: understands the future won’t look like thepast and that it’s difficult to predict; creates a reasonable forecastingmodel based on the probabilities of many potential outcomes

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Future Investment Concerns on the Horizon

Just as concerning as the Brexit results in the UK's EU referendumyesterday so are the outcomes for US politics, also offering uncertaintyfor the futureThough bond yields are up, there is no such thing yet as a risk-free rate;only “lots of places now where you’re guaranteed to lose money”Another major cause for concern are overvalued markets, boring to talkabout and difficult to measure but not paying attention to it could createan issueThe perception of value of ‘today’ is always uncertain, so if we must, wehave to assume that today is right, to then be able to use that as ananchor for how different circumstances will affect the future

Concerned for the market future? What type of forecaster are you? Any

market predictions of your own? Share your answers in the comments

section below - start a discussion today!

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How to Expose Yourself Internationally

Don’t concentrate on attempting to select individual countries; “cheapcountries are cheap for a reason,” and leave the past behind you; moveon from any previous mistakesFind risk exposure to cheap markets at the right price by evaluatingstocks in these countries using multiples that are robust againstdifferent accounting practices such as revenue multiples‘Hindsight is always twenty-twenty.’ Try not to overreact to yourmistakes and accept that some things will always be beyond your control

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The Seesaw Equation

Dividend yield goes up when a stock’s share price goes down; individualinvestors are concerned this is an indication that the dividend is then “atrisk of being cut”Do your homework to check if your dividend is at risk; ask yourself thesequestionsIs the company making a profit or a loss? Is it in large amounts of debt?Or have they increased their dividend recently; do they see a future in it?It is not a weak stock market that threatens dividends; it is poorcompany finances

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Investing: An Emotional Rollercoaster

Investors are desperate to know whether to buy more stocks in markethighs before the prices crash, or whether they should sell everythingduring markets lows like the start of this yearDon’t obsess over your stock portfolio; calm yourself from stressing outover stock pricesIf your emotions are running high then part with a few of your holdingsand put the returns in a money market mutual fund or certificates ofdepositThe best place for your money to mimic the overall market long-term isin “high-quality, low-cost, broadly based index funds”

Obsessed with stock prices or a cool collected investor? Share your

experiences in the comments section below

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"The Economy ≠ The Stock Market"

Take heart that GDP has little correlation with stock market returns—only 10% of GDP is made up by what pushes stocks; earningsStocks fluctuate much more than GDP—compare their standarddeviations for empirical evidence; 3.5% for the US GDP and 17.2% for theS&P 500Given that stocks can decline further than the GDP changes, it’s safe tosay it can rise further too

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Pride Against Gun Stocks

While it can be complex to move away from gun companies indirectly,the website GoodbyeGunStocks.com lets you enter your mutual orexchange-traded fund information and uncover what exposure you haveto gun stocksOr get involved in the Socially Responsible Investing approach; invest inan ESG fund, which considers the environmental, social and governanceimpact of the companies involvedWhile these moves by themselves won’t solve gun-reform, it is at least astep in the right direction

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Any Abracadabra in Value Investing?

Value investing is constructing portfolios that comprise cheap ‘value’stocks; achieved by systematically buying high book-to-market stocks, orlow P/E stocks for exampleCompare the “active” funds performance to the S&P 500 and a deepvalue B/M index: if it’s close to the first broad market one; it’s a closet-indexer, but if it tracks the other; it’s an actual value fundWhile there’s no magic necessarily, active value investing should doexactly what it says on the tin with the right fund; offer value long-termin cheap stocks even though it may underperform during occasionaltime periods

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Diversification; An Old Concept With ModernBenefits

Let “Every man divide his money into three parts, and invest a third inland, a third in business, and a third let him keep by him in reserve,”counseled the Talmud—the old Jewish body of civil and ceremonial lawInvestment strategies have moved on from then, but the concept is stillthe same; holding lots of stocks is not the same as diversifying if they’reclosely correlated or subject to similar external factorsFind the right diversification balance; too much and you will offset thepotential benefits and be open to paying higher costs

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On the Hunt for Outperformance and Scale

In the asset management business it’s important to strike the rightbalance; holding too much asset will eventually impact returns—knownas diseconomies of scale—it’s easier to outperform if you only manage$1m vs. $1bnThe Smart Beta approach capitalizes on proven historical investmentfactors or market inefficienciesThe factor-investing method determines its strategy based on riskadjustment and tends to be cheaper and saferAim to create a combination portfolio that will make the most ofdifferent factor-investing products

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Bargain Hunting in the Stock Market

In value investing stocks become mispriced by the market from time totime due to expectation shortfalls, market crashes, shares plungingfollowing bad news, and being in unpopular sectorsBe sure to buy shares in companies you know and check their metrics,but don’t stop there; it’s worth looking out for other indicators of valueBe patient: when bargain hunting for undervalued stocks don’t force theissue and make a regrettable investment, they will eventually happen intime

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Spend Today or Save for the Future?

A lot can happen while saving money, so the difference betweendiscount rates rising and falling can have either a negative or positiveimpact on the value of future moneyAfter 35 years of falling interest rates, discount rates are unlikely to fallfurther, so it is more probable that inflation and interest rates will staythe same or rise tooThe ratio of people saving has fallen from 14% twenty-six years ago to 4%in 2016, with the discount rate being low, the Millennial generation isinclined to spend today rather than save

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The Battle of Advisors: Robos Vs. Humans

A Robo cannot act in an “advisory” manner; they can’t accurately assessyour financial situation or support and help you adapt in times offinancial crisisRobos create funds nearly identical to the Vanguard Three FundPortfolio, which with experience could be self-managed while retainingthe benefits you’d receive from a Robo Advisor—but without the feesThough they lack the ability to balance risk profiles—tending towardsmore aggressive portfolios—the slowdown in their growth is likelier tolead to lower human advisor's fees rather than their demise

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Suffering From TMI

Since the information age kicked in around 20 years ago, companies’stock prices can nosedive off the back of “a single social media comment,a bad review, or a viral video”Information risk: before, publicity—both good and bad—was in thecontrol of a few, but now with the internet, it’s in the hands of themassesInvestors should proceed with caution when choosing individual stocks;be aware that information now moving at lightening speeds has thepotential to have both positive and negative effects

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Google Trends: The New Measuring Tool for MarketSentiment?

Searches for “market manipulation” spike on Google during low pointsin market cyclesYet these searches drop when people are making money; demonstratinga lack of interest in manipulation only as long as they’re succeedingA canny investor, therefore, could follow Google trends to keep awatchful eye on market sentiment to exploit these periods and invest

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“Experts” Setting Their Own Benchmarks

Though trust is a large factor, those outsourcing their investment adviceshould be aware of these red flagsCharlatans will change the rules if their performance isn’t up to scratch,and alter their strategies, maybe after a time of underperformance—increasing risk to your portfolio, rather than mitigating itThey will be inconsistent with their investment narratives, and shift theblame to someone, anyone else, but themselves

Encountered one or more of these red flags? Share your experiences in

the comments section below

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A List Dominated By Baby Boomers

Interesting to observe that not one of the most important investors of alltime worked on Wall Street during the Great DepressionThe 1950’s was a prime decade: starting low and finishing high, duringwhich Jack Bogle, Warren Buffett, George Soros, Julian Robertson, EdThorp, William O’Neil, and Carl Icahn began their careersWith the average 25-year total return on the S&P 500 being 1463%during their careers’, not only were they all obviously smart but born atthe right time, with “the wind at their back”

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Money Manager Fat Cats

Gaslighting in finance: money managers collecting assets and revenueswith their own self-interest at heart before that of their investors, don’ttrust investment management ‘truths’No matter how you look at it, most findings will show that hedge fundshaven’t delivered what they’re supposed to by now—Warren Buffett’songoing wager is to showcase the same thingOnce assets, strategies or an investment approach gains popularity, itsperformance will inherently suffer—compare early 1990s hedge fundsperformance to now for a prime example

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"The Long And Winding Road"

Value investing’s a journey akin to the above Beatle's song lyrics here,hence its unpopularity; it requires patience, stamina, and resolution tooutlast the “perceived uncertainty around future earnings”Though the journey will go through market periods of sporadicunderperformance, don’t forget to keep sight on your destination;ultimately value works by outperforming in the long runHistorically from the past 25 years, value stocks were more expensivethan their peers today, but there’s indication of recovery in the future,value is indeed making a comeback

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Creativity Drives Improvement

Adaptation and innovation should be inherent thinking on the path tosuccessful long-term investingCreate a relaxed environment, no one is creative if they’re stressed, andseek out diverse investment opinions from a wider range of peopleAccept that you will make mistakes, as we all do, be on the lookout fornew ideas, and don’t be afraid of uncertainty; experimental thinking hasno set outcome—embrace this

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How to Make Bank in Banks

Factor in risk management; analyze the bank’s performance throughpast periods of market volatility—do they demonstrate disciplinethrough the highs and foresight during the lows?Examine earnings; is their growth resilient enough to deliver returns oninvestors capital?Check out the bank’s economic environment and its valuation; byassessing the price-to-book value ratioFinally, discover how the bank treats its shareholders; begin by lookingat dividends but conclude by examining dilution

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A Stroke of Luck...?

Luck: something out of our control, or skill: a way of governing luck—consider professional poker player Phil Hellmuth who’s been at the finaltable for the WSOP events a record 54 times, unachievable without bothat least“Stocks reverting back to fair value? Analyst coverage? Market rally?Investors realizing the value in the stock?” All are dependent on luckLuck is an intrinsic part of investing; understand this and treat it withhumility rather than arrogance

Are you lucky or skilled in investing? Share your thoughts in the

comments section below

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Philosophy, God and Mr. Market All Walk into aBar...

Pascal’s Wager: the risk involved in believing in God is moderate—believe and live ethically for a couple of hours weekly worship overdisbelief and the potential of burning in hellHow that relates when investing and making financial decisions; payattention to small risk especially if the potential loss is extremeA greater philosophical point: amassing money for greed’s sake is abigger risk than merely investing money to live comfortably, insuranceis a small payment to make to mitigate large risks

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Get Your Financial House In Order

Before you consider buying stocks; build up cash reserves and pay offpersonal debt, until then it’s risky gambling not investing for wealthaccumulationEmergency funds will help you survive any unexpected financial crises:having at least a stash of approximately six months salary is a good placeto startThough it doesn’t make the best asset for returns, cash as a reserve is thebest safeguard if you’re disciplined with it; as a back up “Cash is King”

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Sort the Signal From the Noise

Do a background check on your source, sift through any amateurdramatics in the writing, and be aware of the toneAny loaded language will also give you an indicator whether the writerhas a hidden agenda or is being straight with youDo your own due diligence and double check; are these facts or opinionsbeing expressed?

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A Financial Advisor’s True Value?

Good financial advisors are here to save us, as investors, from ourselves;safeguarding us—their clients—from making misguided emotionaldecisions that may risk millionsAs we get older, though our confidence remains, we all suffer fromcognitive decline but recent studies have directly extended a link withthat decline to financial understandingOverconfidence is the worst factor to fall victim too, irrespective oftraining or success in other areas we should acknowledge ourinexperience in finance and seek professional advice

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“For one investor to outperform…

...another must underperform.” Many investors don’t realize theysuccumb to a few irrational behavioral biases following market eventswhich can be exploited by investors aware of these biasesMany investors have an aversion to risk but will overweigh small chancesfor big payoffs; they prefer a bet with a 0.1% chance to win $5,000 thanto receive $5 with 100% certaintyTo make the most of outperforming stocks; follow these two paths,exploit others' behavioral inefficiencies and take more risk for thosegreater returns

0.1% chance to win $5,000 or $5 with 100% certainty: which would you

choose? Share your answers in the comments section below

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Risky Business

Risk of changing goals: We think too much in the present, not realizingwe will change our goals later in life—don’t get to a point where youregret not investing today for tomorrow

Risk of inadequate return: Young investors hoard cash as an assetstrategy over investing in the stock market—this is risky short-term-thinking; invest in stocks for long-term benefits

Risk of your own behavior and ignorance: Markets run with or withoutour involvement, and reacting emotionally to market volatility leads usto reactive decisions which impact the market—understanding andawareness is key to mitigating this risk

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Life, oh Life...Insurance

Savings: money for a rainy day, short-term purchases, or emergencyfunds—for these: use savings accounts, a certificate of deposit, or amoney-market fund

Investing: long-term goals for wealth accumulation, college funds orretirement—for these: invest in real estate or the stock marketdepending on your preferred risk tolerance

Life Insurance: neither of the above, this a safeguard to protect yourfamily and business in the eventuality of your death—the need for onewill never disappear, just adjust as you age

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Leicester City Vs. The Stock Market

We all dream about finding the next stock unicorn to make us a smallfortune—the rarity of this, like the underdog winning a 38 game season,is the definition of a bad investment strategyBehind Leicester’s rise to glory; momentum; their enduring consistency—winning 7 of 9 games since April to avoid relegation, and value;investing in key players disregarded by other premiership teamsProper asset allocation and steadfastness, rather than purchasing over-priced shares and “tinkering” with your portfolio, are more successfulapproaches to wealth accumulation

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Don't Be a Slave to Your Emotions When Investing

Beating the market in the long-run is an achievable goal but a successfulinvestor removes emotion and overthinking from the equationWeigh in the psychological and economic reasons behind any stockanomalies and understand they’re influenced by either value ormomentum factors for a market-beating approachStay the course; all market strategies will fluctuate in performance overtime, be committed and it will pay off in the end

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Slow and Steady

Factor investing: a strategy that constructs a portfolio around riskfactors (analyzed from over the past 50 years) that lead to higher returnswhich MSCI lists as Value, Size, Volatility, Yield, Quality, and MomentumThe rationale behind the strategy is that these factors balance each otherout during the ups and downs of the marketIt is this golden mean: the perfect balance between losses and returnover time that’s the reason the tortoise investors will always win therace by thinking long-term over the hare investors with their risky get-rich-quick investment schemes

When it comes to investing are you a tortoise investor making many

wins over a long time? Or the hare? Share your experiences with us in

the comments section below

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First Class Equity Investing

Don’t lose sight of the end of the game; equity wins can happen whenyou least expect themExecute due diligence; if you’re going to play cricket or invest in equity,discover in advance and factor in performance, environment, and‘weather forecasts’ above allWeather the course; markets rally and the game—both cricket andequity investments—can be rewarding

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“Sell In May and Go Away”

Energy: Lighten your portfolio of a few oil or energy stocks for profittaking, but hang on to the rest for the future as the worst of the oil bustis now behind us

High-yield bonds: Now would be a good time to sell some of those high-yield bonds following the crude oil rally

Stocks and bonds in emerging markets: With EM bonds in a good placeright now, and stocks rallying as much as 25%, take advantage and partways with them

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No More Excuses; Start Investing Now!

Despite having twice as much money as previous generations, just 26%of Millennial’s invest in the stock market, and only 12% would evenconsider investing with any surplus fundsThink big and invest aggressively: aim to outperform everyone else’sportfolio—with long-term thinking—by taking chances and playing thestock market while you’re youngDo your due diligence: acknowledge your lack of investing know-how,understand your friends and family aren’t the best ones to ask, and seeksound financial advice from a professional

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Being Too Emotionally Invested

Following the start of 2016; the number of bullish investors—thosethinking the market will go up—at its lowest in 30 yearsGiven the choice; investors react pessimistically and emotionallyforemost in the face of market swings and will fail to see any positivityeven in light of anyBe pro-active, create a plan and instigate positive changes to refrainfrom emotionally triggered reactions by being aware and more patient

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“When the going gets rough…

...the 1 percent start selling.” US shares values saw a loss of more than$10 trillion following the financial crisis from 2007-2009Speculation is that the biggest earners have more to lose, increasedsensitivity to market shocks or those who earn less are reluctant to sellwhat they have for potential lossIs it emotional trading or are 1 percenters better at timing the market?

Weigh in on this question with us! Share your thoughts and comments inthe section below...

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Momentum Rules

Momentum: an investing strategy that capitalizes on large increases inshare price and by following trends in the market leading to even furthergainsThe compounding benefits of time is it’s major selling point—moneymakes more money—but the opposite is also true; failure also breedsfailure leading to eventual probable value destructionDon’t use it exclusively when making investment choices; incorporatemomentum investing as part of a diversified portfolio

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“Admit What You Don't Know...

...and be OK with it.” Following this advice can set you free as an investor;markets behave randomly short-term and acknowledging that you can’tpredict them will let you tune out the BSSuccessful investing is about not letting our emotions play on ourdecisions or trying to guess and predict the markets—because no one canDefine your own acceptable risk-return-ratio and change your approachto long-term thinking to better ride out any short-term market flares

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Value vs. Growth Investing—Who Wins?

Warren Buffett believes one does not exist without the other; there are anumber of ways to successful growth investor performance but nomanager would buy or sell without looking at priceIn 2016, value investing hasn’t outperformed but growth andmomentum stocks have been underwhelming, despite this, popularity ofgrowth investing hasn’t topped outThough one view is that “growth and value managers are ‘equallydeluded,’” growth managers have nothing to fear just yet as currentlyboth paths remain top approaches to equity investing

Think growth investing has lost its 'momentum'? Is value investing

outdated? Share your comments with us in the section below

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Large Returns Mean Large Gambles

The high risk of investing in private equity is balanced by huge upsidepotential of commercial innovations and business models profiting sodeveloping economies can prosperInternational Finance Corp., (IFC) guidelines to best navigate frontiermarkets place utmost importance on any fund manager having a localpresence; the best offense is always a good defenseNo such thing as business as usual in frontier markets; as well as theusual risks involved in equity investing, developing economies faceother threats too —anything from conflict to natural disaster

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Painting the Stocks Picture from Last 50 Years

$1 becoming $102 in past 50 years—if you’d reinvested all dividends andhit no cost problems—doesn’t live up to longer-term historical averagesTime periods look the same on paper, but not when you considerinflation—better returns in the last century were from 1916-1965; triplethose of last 50 yearsOur expectations for the future should factor the benefits ofcompounding for long-term high returns, but over decades, short-termreturns may be affected by low or negative returns before then

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Complex Investing ≠ Smart Investing

Even top named leading investors make mistakes and get involved incomplex investments for their protective value or the belief that a moreelaborate thesis is a likelier winnerComplex investing should hold no appeal when simplicity is assuccessful—but it requires mental strength to avoid the allure of a more‘sophisticated process’Simple should not be confused with an easy or stupid investment; usingthis reductive process doesn’t mean you “don’t get it”

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Balancing Love and Risk

If we struggle when looking for our soulmate, we tend to play with firewith our investments; choosing high-risk, high-return stocksIt would make sense to mitigate the risk we face in not finding theperfect partner in other areas of our lives, but instead, we opt to increaseit putting our “proverbial eggs in one basket”Rather than drawing on investing experience we factor a lack of sexualpossibility into our decision-making process and gamble for biggerfinancial rewards over romance prospects

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Master Jedi/Value Investing Principles

Navigate and fly—wait, we mean, invest—inside your circle ofcompetence: with industries and companies you know“Adventure. Excitement. A Jedi craves not these things,” think slow andsteady for greater long-term wealthNatural contrarians; a good value investor is patient and stays thecourse, “remember; your focus determines your reality”

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The Good, the Bad, and the Special Case

Good Capital Allocation: Using the money in your account in thesmartest possible wayGood Capital Management: Use outside capital in your smartest capitalallocation to leverage your position and increase your profitsBad instances of both occur when capital is spent on extravagant orunwise asset choicesDespite what most investors seem to believe; share buybacks do notalways equal great capital allocation—unless the rationale for therepurchase is that the company thinks its stock is undervalued

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From Worst Fund to First

Buy value funds that are underperforming instead of following naturalinstincts to choose ones with better recent performanceStrong-performing funds increase their gains as more investors opt intothem inflating the price—money makes money—creating an ongoingcycle that strengthens the value stockBuy at the beginning of this cycle, so look for funds that have had asuccessful run in the past and make the most of buying in at a discount

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How to Avoid Being a Boiled Frog

A frog thrown into boiling water will jump straight out, but one thatstarts off in lukewarm water is unaware of the danger and stays until itcroaksMoney illusion: the disconnected view we have of our finances being—unaware of what money we hold in real value and instead focus on thenominal; an illusion of 'stronger' buying powerWhile overspending is risky; the alternative treasury flooding duringeconomic downturns—instead of buying equities for long-term value—isequally ill-considered

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Responsible Investing; Not Just an Ethical Fad

More and more mainstream funds are considering environmental, socialand governance (ESG) standards when making investment decisionsThe impact of increased ESG awareness by companies is provingpositive, as the effects of ignoring these factors are such that long-termbrand identity, consumer trust, and share price, can be extinguished insecondsNot a ‘New Age’ concept concerned only with social responsibility;recent research shows the trait adds not only to the sustainability andprofitability of a company, but also long-term investment returns

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How to Cope with Market Volatility

First three months of this year are a perfect example of market volatility;causing understandable reactions of anxiety and uncertaintyTo deal with these; remember that if some investors are selling stocks,others are buying, and the market isn’t set in stone so don’t waste timetrying to predict itAvoid making rash judgments and don’t forget that markets andeconomies are not the same things

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Hindsight Is Always 20-20

While many accumulate wealth through concentrated investments,there is a long drawn out debate on the method's validityExtreme wins through concentrated investing are the stuff of legends, itworks for a few only; the odds of being an extreme winner are 7% againstthe higher probabilities of becoming a catastrophic loser at 40% oddsA perfect example of an investor who should have diversified is MartinShkreli: his concentrated investment in Valeant Pharmaceuticals saw apersonal loss of over $40 million in 2014—given his actions though, somewould say he deserved itLooking at the past, 75% of investors with concentrated portfolios wouldhave benefitted from diversification, sadly, hindsight can do nothingmore than show us this, and hopefully teach us to become better in thefuture

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May the Odds Be Ever In Your Favor

Despite infamously investing in the company Delta Financial whichwent bankrupt—but not before many investors copied Pabrai'sinvestment bet—Pabrai does not apologize and stands by his gambleInvesting in stocks is a game of probability even if the odds look goodyou may lose, and yet, still turn a profitBalance the level of risk you can handle and learn to accept loss as part ofinvesting—a skill worth developing

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5 Basic Rules to Great Stock Picking

Price to Earnings: Use the P/E ratio but check out all the other detailstoo

Price to Cash Flow: Cash flow metrics can’t be cheated like earnings can—look at these first

Price/Earnings Momentum: Momentum can be great on the way up butcan turn dramatically, invest carefully and keep an eye on them

Price to Book: While value investors—including Warren Buffett—seethis as a crucial metric, it is difficult at times to measure its validity

Technical Indicators: Analyze the fundamentals first, then judge bythese; too many to navigate well otherwise

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Momentum Investors: Forever Blowing Bubbles?

The argument is momentum investing produces more ‘bubbles’—foamyinstances that rise quickly, but any money involved disappears into thinair when they burstSudden demand for stocks inflates prices way above the actual worth,leading to volatile fluctuations i.e. bubbles and crashesThe two reasons behind this are a) “benchmarking pressures” whichcause investors to buy up risky equities and b) the circular effects ofthese performance-chasers; momentum investors and benchmark-trackers going round and round after each other in this method till thestock bubble bursts

Tell us your thoughts; do you disagree with this argument? Are you a

momentum investor? Share your comments and experiences in the

section below.

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Just How Global Should We Go?

John C. Bogle (Vanguard founder) states that investing in the S&P 500stock index (through an index fund) is enough international stockcoverage for your portfolioIf we compare an international equity fund to a US equity fund atVanguard; the performance difference (a gain of 186% versus a mere85% from 2003 to 2007) demonstrates otherwiseDon’t limit your portfolio diversification to your home country; committo investing internationally and hold fast for greater returns

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Don’t Invest As We Do, Kids!

Though we’d like to think the next generation will learn from theprevious ones’ mistakes; it turns out children follow the same risk-taking investment patterns as their parentsA 34% higher probability that children will invest if their parents areinvestors tooWhile love may be the greatest gift you can give your child, some soundinvestment advice might not go amiss either :)

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Bull Markets Don’t Make for Happy Investors

In ‘good times’ investors don’t look for aid from financial advisors—pluswe’re quick to forget the times they helped us in crises—and thosehedging or diversifying look “schmucky” for playing it safeWe’re unsatisfied with our personal returns; instead, we envy others’stock performances or experience FOMO (the fear of missing out)Despite our technological advances, affluent lifestyles, and a stockmarket that is nearly back at last year’s all-time high, we remainunfulfilled, and suffer due to our own manufactured unhappiness

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The US' Unsustainable Economic Path

With no hidden agenda or gain in mind, Druckenmiller warns that theUS faces future economic disaster trying to support a retirementgeneration while not having a workforce to fund itHis epic track record of 25 years straight without loss at an annualizedrate of return of 30%, testify that we should perhaps pay attention tohimAn unsustainable path lies ahead, if current tax rates continue, US debtwould multiply by 20 times over to $211tn from $11tnFor a secure financial future, plan ahead and invest for number one—yourself—rather than look to the state for support as it may not be ableto supply it

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Tell us your thoughts; is the US headed for disaster or has Druckenmiller

misread the signs? Share your comments in the section below.

Make Your Cash Work For You

As a retail investor rather than a fund manager your cash is not chainedinto investments at all times so you can maximize it’s potentialBe strategic and patient, just because you have cash doesn’t mean youneed to deploy it—manage your cash position with discipline and thereturns will pay offUtilizing cash wisely will benefit long-term returns though it’s difficultto take the required contrarian view at times

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Don't Let Your Returns Go Down The Drain

While risky financial wins are more remarkable, it is not a strategic wayto invest; the mark of a successful investor is by not losingCompare two portfolios: same starting value and average return; the onewith larger variance will result in lower total return (known as thevariance drain) so mind the volatility in your holdingsConcentrate on managing portfolio risk instead of trying to chooseremarkable investment winners for greater portfolio return

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How to Take On A Bear Market in Retirement

Being forced to sell off investments from your portfolio too soon won’tleave enough shares out there in the future chance to recoup as themarket recovers; a period on average of “3.1 years”—though historysuggests otherwise, with “almost 12 years” being the longest caseBefore retirement, store in cash—but don’t spend—a backup of one tothree years salary; then act according to which market we’re in at thetimeWhile navigating a bear market in your retirement won’t be easy, lookafter your portfolio first and foremost and it will look after you

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Breakthroughs in the Future of Investing?

Breakthroughs disobey the rules we set in stone—our conventionalwisdom (CW)—and alter our perspective of the futureCW: we make bad investment decisions by ourselves—breakthrough:baby boomers invested differently to their parents and made informedinvestment choices, future looks brighter stillCW: financial advisors’ income is huge—breakthrough: ETF competitionfocuses on offering lowest possible fees, so perhaps we are on the way toa future where advisors are paid fairly?

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7 Sins of Investing

Lust: Or ‘recency bias’; we confuse our evaluation of a stock's futureperformance based on its recent onePride: When share performance leads to arrogance in valuing our ownassets; the endowment effect, and we hold onto stocks for longer than weshouldSloth: There is no easy path to travel when investing, don’t overlookpotentially crucial details when investigating an investment worthycompany in an effort to find shortcutsEnvy: Comparing your stock performance to that of other investors =fruitless competition, be patient and have faith in your abilities, and thelong-term outcomeWrath: Keep calm and carry on investing; don’t let anger result in knee-jerk decisions you’ll wish you hadn’t madeGluttony: Don't bet all on one horse; piling onto a company in a 'winningstreak', and convincing ourselves we're onto a sure thing can havedisastrous outcomesGreed: If Gluttony is overindulging when you shouldn’t, Greed is selfishquick profit-seeking without due diligence and over-hoarding withoutconsideration

Have you been sinful? Share your investing sins in the comments

section below. Confess all and start afresh

7 Sins of Investing

Discover Which Red Flags Are Lurking in YourPortfolio

Find the balance between over and under-diversifying your portfolio;juggling too many assets or putting all your eggs in one basket can bothlead to underperformanceDon't let your money stagnate, play the long-term equity investments tomake the most of your savingsBe strict with your portfolio's assets, spring clean and remove those thatdon't actually fit with your own return and risk expectations—don't justinclude them on 'friendly' recommendation

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Look at the Stock Market Anew

Adopt a contrarian view to investing and understand behavioraleconomics to combat concerns over the impact of various globaleconomic and political factors on financial marketsShort-term events and volatility should not induce decisions made frompanic and fear—the market will always recover in the long-runWhatever your style as an investor, smartly examine all influencingelements on your investments, and approach today's market "in a‘courageous and cautious’ manner"

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Make Your Own Investment Choices

Avoid real estate pushers, while "flipping and speculating" have madesome a profit, don't be taken in—a REIT could be just the ticketDon't be hustled to move on investments just to 'do something', as mostof the times patience is a virtue in the long runCourses/sessions/dinners offering 'free information' will play on yourfears, make you believe you don't know anything, and lead you a dance—listen to trusted advisors and avoid these hawkers

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Long-term Averages Aren't for Short-TermExpectations

“Statistician, a person who lays with his head in a oven and his feet in adeep freeze stating, on the average, I feel comfortable”—BruceGrossmanAnnual returns chart for the S&P 500 shows the return has only beenclose to the 'average' three times in 90 years, so don't base short-termexpectations on long-term past averagesAccording to a normal distribution the annual stock market returnshould only be 3 standard deviations from the average 0.3% of the time,however, history shows the probability to be more than 4x higherThe global economy has so many impacting physical variables adding tothe "psychological component in risk assets", it is understandable whythe average is rarely struck

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Dividends Declining Importance on Equity Returns

For the past six decades, dividends impact on the rolling 30 yr totalreturn for the S&P 500 Index has sharply decreasedS&P 500 charts show trend changes after 1960’s, with the dividendimpact factor falling to 111% from 420%The path to accumulating wealth has evolved from dividendreinvestments as its chief source to share price gains becoming the newkey factor instead

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Grading of Money Managers 'GPA' is Too Strict

We should not hold our money managers accountable at a singleperformance indicator, such as returnMeasure instead your performance expectations for your moneymanager, the risk target you believe they should be hitting, theircommunication with you, and the overrall` impact they have on yourportfolioBig-picture thinking; let’s be more rational—instead of narrow—in ourassessment, grading them too harshly based just on return may harmour overall portfolio performance

Weigh in on this debate with us. Are we being too harsh on our money

managers or is return the only thing that matters? Share your

comments below

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Value Investing and Startups—A Back to BasicsGuide

Businesses operate on par to the “old school method of investingmoney,” i.e. Value Investing, and the ‘back to basics’ rule applies forinvestors as well as entrepreneursAs the saying goes, ‘Success breeds success, and money breeds money,’—have real capital behind you, not the "promise of cash" for investmentsFollow Warren Buffett’s “Circle of Competence” rule; keep within theboundaries of your areas of expertiseAccomplish more in business by thinking long-term, as proven by hedgefunds for wealth accumulation

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Think Outside the Box With Your Cash Allocation

The 7% expected return of a surveyed group of 500 investors whileholding a 23% cash allocation in their portfolios, is unrealisticThe common view cash is held in fear is wrong, it is

indecisiveness—between choosing an unreliable but traditional fixedincome or the risks with plunging all into long-only equitiesChoose instead to check out an active global bond portfolio, real estateand infrastructure funds, and/or include other strategies such ashedged equity, or long-short equity also

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Why Equity Will Always Trump Credit

A common error is assuming returns from the credit market areinfluenced by ingenious bond traders, rather than the actual source; theinvestment products themselvesFor a more immediate revenue, corporate bonds produce a regularsteady “fixed rate of income expense paid by the issuing entity”But due to its high-risk nature, equity gains will always yield better long-term returns

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Check Out the Past 10 Years’ Asset Performance

The chart compares the returns of 10 asset classes (using ETFs/funds asproxy)—from different stock categories to commodities, bonds, and cash—over the past 10 yearsCommodities set to be last player picked on anyone’s team or portfolio asthe worst performer over the past 10 yearsSmall and mid caps outperform consistently in the past 10-15 years

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Academics Not Playing with the Same PortfoliosThey Teach

Eugene Fama, Richard Thaler, and Roger Ibbotson—amongst others—areall guilty of not practicing the indexing they preach to the crowds,instead, they all handle actively managed portfoliosDespite their warnings to us on the dangers of overconfidence amongstinvestors, they certainly seem to think of themselves as smarter than theaverage guyWhile they will continue advising others to invest in passive indexfunds/ETFs, conflictingly—and based on their performance—they canget away with not following their own advice

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4 Building Blocks to Success

For nearly 2000 years man’s growth and development were stagnant,until the 19th c. and we harnessed electricity, boomed during theIndustrial Revolution, and took off with innovations in technologyWilliam J. Bernstein, investment guru, believes the four factors behindthis progress were holding property rights, thinking more scientifically,widening our economic markets, and improving communication andtransportationFinance and economy will always fluctuate, but we only fail in businessand investment when we miss one of these factors from the formulaCore-customer ethics, long-term ambitions, and thriving creativity arethe values behind every successful company—companies that make upthe economy

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Risk; Play the Game Properly to Win

We need to be sure we know what risk is before we can balance itproperly in our portfolios, else we 'risk' not improving our investmentreturnsMany investors judge risk based on valuations and price-to-earningsratio (P/E), this by itself is not enough; both low P/E and high P/E candisguise important factors we should take into accountNot all risk is unhealthy, do your homework and look for hidden worth;just because a stock is expensive doesn’t necessarily mean it’s high risk

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Mars vs. Venus In the Finance World

Men and women think and invest differently; women tend towardsinvestments that are lower riskBy outlining clearly, and giving proper consideration to various personaland business factors, women can take the next step to build-up theirinvestment aspirationsPlan ahead for the future—whether you are single or married—andbalance those long-term and risk averse investment ambitions with a dipin the “equity markets through a systematic investment plan”P.S. Actually, we take back what we said in the introduction of this post—men should also listen up to this sound advice

Do you think men and women invest differently? How and why?

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Do These Four Indicators Have the Answer?

For first time in six years, a proprietary liquidity measure used to predictS&P 500 indicates no guarantees for further highsTechnical indicators show that even though the decline following May'shigh last year did some damage, developments are bullishLooking at investor sentiment, “more up side over the comingweeks/months is likely”With no particular “seasonalities or cycles in play”, a bear market in2016 is more unlikely than many believe

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S&P 500: Just A Trend Follower After All

S&P 500 focuses on uptrend ‘winning’ shares and makes the most fromits 10 best stocks, thriving on 2% of the indexIt’s ruthless in its disloyalty; “when a company's market cap drops to thebottom of the index, the S&P replaces it with another on the rise”Most of us should probably be index investors, but if we choose not to: togain from value investing during a bear market, don’t look for bargains“unless the inflection point is obvious”

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Fed Forecasting Models are Out of Touch

Fed's equilibrium models are too simple and static to cope with marketdata—wrong for past six yearsMeasure market data using Complexity Theory (CT) accounts forfinancial panics; considers the “diversity of actors” in the global market,and “interconnectedness”CT also takes into account “market interaction”—specifically scale—and“adaptive behavior,” or herding

Do you agree, as the Fed demonstrates, that our economic forecasting

models are outdated and inaccurate? Share your thoughts with us in the

comments section below

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Emotions Causing Quick Shifting Views in Investors

Investor beliefs shift quickly and easily; in just the last few months we’vechanged viewpoints from seeing potential recession recovery to beingconcerned and panickedBearish commentators getting more airtime and overselling biased bearmarket doom and gloomSee the current market as a possible opportunity, avoid emotionalbehavioral biases

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Find the Quality and Value Balance

Paying too much for high-quality investments will increase risk for yourmargin of safety—the distance from your entry price up to yourestimate of the intrinsic valueInvesting in a bull vs bear market differs vastly—“at the bottom of themarket cycle, there will be plenty of opportunities" to find both qualityand value”Find the balance: investing in high-quality stocks might lead you tooverpay, but focus too much on value and “your portfolio becomes aslave to the business cycle”

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Enter...Pursued By a Bear Market

Past year’s selling fueled by recession fears has lead to lower pricesHigh-yield market spreads are returning to 2009 levels and investorsdescribing themselves as "bullish" are now below 20%; a goodopportunity to take advantage and buy now2016 markets will be decided by valuations and the trend of the economyas the "latest round of central bank intervention is proving ineffective"

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Don’t Invest in Fear of What has Just Happened

One in three investors fears a repeat of 2008-2009 financial crisis withinthe next three years, with some countries experiencing higher level offear than others; France (46%) and India (59%)Recent events will afterward become ‘normal’ to investors, “but a marketcrash, a financial crisis, deep bear market or hyperinflation” will leave amental markTypical fearmongers are not predicting anything new just stirring up

irrational fear—look forward but don't fear the worst

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Ignore the Forecasts; Ride Out the Storm

Media’s “Tower of Babel” is constructed by momentum investors doomand gloom predictions

See the big picture. Stay centered on "economic fundamentals"—don't

bail out or rush in due to the media noise—look at long-term economictrends, not short-term “broken markets”Value investors are buying now, as “fundamentals remain quite positive,and the equity markets provide ample investment opportunities”

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Normal Behavior in the Stock Market

US stock market returns from 2009-2015 were “abnormal,” not the lastsix weeks; this is a return to "normal"We base and overweight our predictions for the future on recentmemorable events, what behavioral economists call "recency bias"The media also tend to reinforce this bias—be aware of the hype and stopit from overly influencing your investments

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Michael Burry Focused on One Commodity: Water

Despite 70% of the Earth's surface covered in water, a mere 2.5% of thatis freshwater andy only 0.007% is easily accessible to support the globalpopulation of 7 billion peopleBy 2020, "there will be an $84.4 billion gap...between what we’respending on water infrastructure and what is needed"Get exposure by purchasing water rights, investing in water-richfarmland, or in companies focused on: water utilities, infrastructure,and equipment

What do you think about water as an investment? Do you have any

ethical concerns? Share your thoughts and comments in the section

below.

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Politics and Investing; Mix at Your Peril

Barry Ritholtz warns about the dangers of crediting presidents for, “goodeconomies and strong markets and assigning way too much blame forthe bad”Drawing a correlation between politics and investing is the same asinvesting on the Super Bowl Indicator—correlation doesn't implycausationRitholtz analyzes and critiques investors’ behavior for both politicalparties. Here, both Democrats and Republicans share something incommon; that politics and investing don’t mix

Do you disagree? Are politics and investing related? Answer with your

comments in the section below.

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Profit from the Asymmetry in the Stock Market

Capitalist Exploit’s blogger highlights The Big Short film (2015) as anexample of the Pareto principle; how roughly 80% of effects come fromonly 20% of causesDiscover how to be part of the 20% margin in the stock market, now andin the future, that has 80% probability of paying out returnsThink with your head and not your heart, as “the majority of the marketwill react to situations with a primal brain, failing to think thingsthrough”

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Bad Things Happen All the Time

With 14 major bank panics in the past 216 years in the US, history has alot to teach us according to the Motley FoolBankers should not to be caught off guard and assume the business cyclewill turn, and the economy has pulled itself out of the crisisThe prudent will remain wise and act with caution following history’slessons, those who don’t “will see their banks flounder or perish”

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Asset Managers Lures and Fish Can’t See Colors

Just as lures are designed for the fisherman rather than fish, so too‘smart beta’ is clever marketing targeted at investors; but isn’t the fix-allremedy they are being soldAs investors, we want all the success of investing, but none of the trialsand tribulations involved—asset management firms exploit this to getour investment dollars"Factor investing" is nothing new, but we struggle to get excited byadvantageous long-term investing and instead find short-termalternatives more appealing

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7 Deadly Sins of Fund Management

See how lust is the danger of forecasting. While Gluttony and Greed arebelieving we know more than the next investor, and the illusion thatmore information is better informationLearn how Sloth is over-optimism and over-confidence and Wrath isrevealed in investors' “confusing noise with news in their bid to out-smart each other”Note that Envy is the belief that other stock brokers have growth they, infact, don’t, and pride...well, that comes before a fall

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A Wounded German Tiger

Tyler Durden (blogger for Zero Hedge, not of Fight Club fame) looks atthe escalated recent war between, “a badly wounded Deutsche Bank”and the ECB—now allies with the Bank of Japan (BoJ)—thanks to theintroduction of a new easing programWith the ECB ignoring central bank policy and the BoJ’s surprise move tonegative rates adding to the easing policy, Durden highlights the largerconsequences these companies perhaps don’t see for the futureDeutsche Bank is fighting from a defensive position especially withrising Credit Default Swaps on its debt, and we all know that woundedtigers are more ferocious when backed into a corner

Who will be the victor in the war between Deutsche Bank and ECB?

Answer with your comments in the section below.

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Just How Far Down it Has to Go

James Rickards argues though not yet in a bear market the loomingpossibility has excited others to call upon the Fed to cancel theirintended plan regarding interest hikesRickards', research demonstrates from previous similar events that thedecline is probably not on the Fed radar at the momentHe believes the market will need to decline 15% before they get involvedand desist from their planned rate hikes, as they have their own policygoals in mind until then

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A Bottom-up Outlook

Here Joshua Brown showcases a discussion between two investors,“steeped in the Ben Graham school of bottom-up fundamentally-drivenstock picking”Brown sympathizes that they are stuck between a rock and a hard placetrying to make the most of the market in a bear phase with a long-only,stock-picking mandate“If everything is going to succumb and slide downhill in the end, whyput so much time and effort into which pair of skis are going to take youthere?”

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Margin of Safety Everyone?

With doom and gloom perspectives on the market every day, we needthese wise words from Graham, Klarman, and Buffet to protect us fromourselves and whatever path our investments may take in such anunpredictable futureThis article answers how intelligent value investors (such as you, ourreaders) can make sure you have a margin of safety for your investmentsAs Buffet puts it, "When you build a bridge, you insist it can carry 30,000pounds, but you only drive 10,000 pound trucks across it. And that sameprinciple works in investing."

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5 US Companies Could Create Their Own StockMarket

The market cap of Apple and Alphabet (Google) combined comes in atonly slightly less than the entire Australian stock marketBy itself, Apple’s market cap is larger than the whole stock market ofBrazil aloneIf Apple, Alphabet, Microsoft, ExxonMobil, and GE were to join forces as aseparate stock market, they could create the sixth largest stock marketin the world all on their ownWe now understand why the US contributes to 40% of the global stockmarket value, just by looking at the above numbers

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The "Father of Investing"

From Security Analysis (1934) and The Intelligent Investor (1949) whichare still read today, and teacher to many investing legends that followedhim; Benjamin Graham IS value investingDiscover the legacy he left behind him and the influence he had on othervalue investors who took his ideas and evolved themThe generation that followed proved why Graham’s strategies workedAnd the following generation took it further discovering how you candevelop your organization and personality to be successful with yourown value investing

Source: VintageValueInvesting.com

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Commit to Long-Term Thinking

BlackRock CEO Larry Fink’s letter to CEOs around the world encouragescompanies to think long-term in their strategies for future investmentand growth"Today’s culture of quarterly earnings hysteria is totally contrary to thelong-term approach we need."Companies have to be fluid and adaptable in the face of their externaldynamics, but they should also build a strategic framework thatpromotes long-term value creation

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To Invest in India or Not? That is the Question

Reading this prompts us to ask if India (world’s 2nd largest population)will be the new driver of the global economy after China?“There is nothing wrong with investing in India as part of a balancedportfolio,” but don’t be dazzled and go overboard on your risk profileBeware that even though there are many listed stocks in India, very feware liquid. India has "3,474 listed stocks – but only 10% of these wereinvestable by our definition (Stotz and Lu, 2014)."

Is India the next big market to invest in? What do YOU think?

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Eagles' Singer Offers Sound Investment Advice

Following the recent market turbulence in January, Fran Kinniry urgesus to follow the late Eagles' legendary singer-songwriter's words and"Take it Easy."Despite a rocky start to the year, the equity market's performance is notdoomed to follow the same trend as the first monthExpect "higher volatility in equity returns relative to an asset class suchas fixed income and to expect that the volatility of volatility—thechanges in volatility from one period to the next—will be higher as well."Refrain from reacting with emotion to the market's volatility

What would you do in times of high volatility? Let us know in the

comments below

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Black Swan Events can Change the World

With analysts offering an extreme diagnosis of recent events andpredicting dire financial crises to follow, Morgan Housel denounces the"second coming of the Great Depression."It is worth bearing in mind "more money has been lost preparing forbear markets than in actual bear markets."Abnormal events do occur – black swans – but the probability is higher ofcommon ones occurring. Do not look for rare outliers around everycorner, most times swans are white

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Are We On Route to a Recession?

Recent falling oil prices are a concern at the top of everyone’s mind at themoment in the financial world. Here, Jim Hamilton reflects on therelationship between crude oil, the stock market and the effect theselowering prices may have on the overall economy. In short though, if welook at economic history we can see that lower oil prices have never, in fact,caused a recession in the U.S. Though higher oil prices certainly have - forexample, following 1973 and 1979. And if as he argues there is anycorrelation between the two, it is not necessarily going to have such anegative impact. In fact, as he suggests, there is just as much chance of apositive boost to the U.S. economy over a negative one.

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Balance Your Risk Profile

This article looks at how to address your max pain points when it comes toinvesting. As Cullen Roche states, we tend to discover how our risk profileshould look, the hard way—a disturbing lesson we don’t want to learn whenit is our savings that are out there fully or mostly invested in the stockmarket. Working out what your max pain points are early is the path tosuccess. Don’t follow the same route others have taken of selling low afterbuying high after learning this about themselves. Too much of anemotional response rather than a calculated one.

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A Silver Lining to Federal Reserve Interest Hikes

Here’s a positive outlook for the future following an announcement by theFederal Reserve that they are doubling their interest rate. While somebelieve this might have a negative impact, Michael Vodicka urges us to lookto the international market following Fed rate hikes in the past. In eachcircumstance in the past 35 years, international stocks have outperformedthe U.S. stock market—also a likely outcome to expect for the next year atleast. Though the article continues to outline some specific stocks, wethought it was more interesting to highlight the positive effect Fed ratehikes can have outside the U.S. for our readers. It is potentially worth takinga look at large international companies that derive their income from theirlocal markets, those who remain unaffected by the U.S. economy and Fed'srates.

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Strong Words About A Strong Economy

We brought this article to light for you to offer a stirring alternativeperspective on the state of China’s economy from David Stockman. As theworld's second-largest economy continues to make the move away from itsmanufacturing roots—the steel industry—eyes are watching to see whateffects this, along with its stilted growth in 2015, will have on what seemedto some previously an unstoppable global force. Are we really watching thecountry "on a wild tear heading straight for the economic edge of theplanet"? We suggest drawing your own conclusions on what the future mayhold for China.

Let us know what you think about China and Stockman's view in the

comments section below.

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Hedge Your Bets

Though this may not be the most exciting article that we link our readers upwith, it’s worth a read to see the benefits that bonds can hedge to your stockportfolio. It is in bonds we place our asset trust during times of uncertaintyin the market such as these—they are the ballast in our portfolios. Whenstock markets do, as they occasionally have a tendency, go a little haywire,long bonds continue on average to do well. So, think about both the positivereturn and diversification benefits of reducing the risk in your portfolioand bond with the U.S. Treasury.

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A smart philosophy for good investing

A succinct blog post which offers an interesting perspective on investing.There are so many viewpoints and opinions out there on what you shouldand shouldn’t do, what picks you need to buy, and above all the sheermagnitude of information about investing in the stock market. It’srefreshing to read from someone who suggests a keep calm and don’t panicattitude to the whole thing.

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Thinking of using a financial advisor?

Here, Kathryn Cicoletti - an ex-Director/hedge fund research analyst fromNew York - offers some strong advice for those thinking of employing theuses of a Financial Advisor. Her website sets out to empower and educatethose interested in making the most of their finances and investing. Andshe has a straight-talking, no-nonsense approach arguing in favor ofseeking out a robo-advisor rather than their human counterparts who seemto load up the fees when creating your portfolios.

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Keep emotions out of it

A man after our own hearts, Bloomberg View columnist Barry Ritholtz hassome sound guidance for keeping a level head when it comes to making themost of investing your financial wealth. With January starting the way ithas this year in the stock market, the segment is worth a five-minute watchto remind us all not to act drastically in these situations. Remain calm andkeep your sense of humor about the whole thing just as Barry suggests.

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Above all don’t panic!

With the Royal Bank of Scotland’s warning bells ringing in our ears fromlast week ominously foretelling a ‘cataclysmic’ year for 2016 with slumps inshares and oil, it would be easy to panic and react as they suggest and “Selleverything”. With a headline like this landing on your desk first thing in themorning, it would be hard not to react to the doom and gloom predictions ofa stock market crash ahead. Thankfully, financial investment blog writerDylan Lewis of The Motley Fool has a few calming words to say in response.Importantly, not to react out of fear and emotion - these should not bedrivers behind your investment choices. Read more here and heed Lewis'advice wisely.

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5 Things everyone should know about investing

This blog post is a compiled list of the 122 Things Everyone Should KnowAbout Investing and the Economy, and these are our 5 favorites from it:

16) Napoleon's definition of a military genius was, "the man who can do theaverage thing when all those around him are going crazy." Same goes ininvesting.

35) As last year's Berkshire Hathaway shareholder meeting, Warren Buffettsaid he has owned 400 to 500 stocks during his career, and made most ofhis money on 10 of them. This is common: a large portion of investingsuccess often comes from a tiny proportion of investments.

52) There is a strong correlation between knowledge and humility. The bestinvestors realize how little they know.

74) The book Where Are the Customers' Yachts? was written in 1940, andmost people still haven't figured out that brokers don't have their bestinterest at heart.

95) However much money you think you'll need for retirement, double it.Now you're closer to reality.

Have a read yourself and see if you agree or disagree. Tell us your

favorites in a comment below.

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