A Few of the Worst Word Combinations for an Investor
Top 5 of the Week of March 13
A Teachable Moment’s Anthony Isola opens our Top 5 this week looking at the investment pairings you should avoid. Andrew Miller, writing for Alpha Architect, advises us against betting in opposition to Warren Buffett. And Meredith Jones for Institutional Investor suggests we stop “carping over fees.”
Lauren Foster of Enterprising Investor helps us improve our decision-making processes. And The Irrelevant Investor, Michael Batnick, asks if we can predict bubbles…
A Few of the Worst Word Combinations for an Investor
- Average and Return: There really is no such thing as an average market return that you can rely on, so don’t deceive yourself that it’s possible to achieve one
- Day and Trading: Actually, make that trading at any time of day; attempting to time the market with short-term speculations is a surefire way to lose money
- Average and Down: Buying more shares in a stock that has already dropped in price increases your odds of losses and can result in overweighting that sector within your portfolio
The Foolishness of Betting against Buffett
- Buffett’s renowned bet that the S&P’s performance would outperform a collection of hedge funds is drawing to a close; with Buffett undoubtably winning
- Using the Monte Carlo method (a technique to account for risk probability), the S&P 500 wins against Hedge Funds 58.6% in over a 1,000 simulations
- Indicating that the odds were always in Warren Buffett’s corner in this now (in)famous bet—following his principles for value investing
Be truthful… Whose side were you on? Share your comments in the section below
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You Get What You Pay For
- While we think nothing of paying the markup on wine, bottled water, and designer clothes as consumers
- As investors, we balk at paying management fees for the returns on our retirement funds
- Balance the cost of your investments against its capability of providing diversification, returns, and access to niche market sectors to decide whether it’s worth it
President + Trump = Investing Uncertainty
- 2017 is a year already renowned for its economic uncertainty, so in these ambiguous times it’s important to make smart decisions
- Expect the unexpected and document your method; analyze your process beforehand to anticipate any surprises and keep track of the reasons for your decisions
- Take responsibility and be humble in your investment strategies; the outcomes of your decisions are on you and no one else, but by staying modest you can avoid the dire consequences of overconfidence
“Bubbles Are Like Snowflakes”
- No market bubble is the same, and 47.5% of the ones that have been identified since 1928 did not actually crash
- When they do go though, predominantly they burst without warning, and studies show that the probability of a crash is linked to the magnitude of the preceding index price increase
- But while the odds increase—100% return increases the probability of a crash to 53%, likewise 150% return increases odds to 80%—this still doesn’t make it easy to predict
Top 5 of the Week is a summarized collection of financial investment articles that we like and think you might like too. Having written thousands of pages of equity strategy and company research between us, we understand the allure of the ever-changing world of finance. Investing is an art form—and like everything, something you can work on and improve at. There are some excellent writers out there on the finance web, some offer a running commentary on today’s market, some are doing research, some have tips on how to Become a Better Investor, and some just lift the cloud of fog behind a lot of financial jargon. Each week we will keep you up to date with the top 5 articles worthy of your attention.
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DISCLAIMER: This content is for information purposes only. It is not intended to be investment advice. Readers should not consider statements made by the author(s) as formal recommendations and should consult their financial advisor before making any investment decisions. While the information provided is believed to be accurate, it may include errors or inaccuracies. The author(s) cannot be held liable for any actions taken as a result of reading this article. The Become a Better Investor Team doesn’t necessarily endorse any stocks or shares mentioned in the articles or the author of such articles linked to and summarized in Top 5 of the Week and cannot guarantee the accuracy of its information.