I highlight a lot of notes while reading. I try to make the time to actually review them each quarter. Here are some of the hand picked ones I thought you may find useful from last quarter.
May 25, 2017 at 08:12AM No? or Yes, Yes? | Meb Faber Research - Stock Market and Investing Blog
Indeed, so many people have jumped on the passive index bandwagon that there are now more indexes than stocks!
It’s basic fiscal Darwinism – when some groups are charging 0% and you’re charging 0.9%, you’re not going to survive. (Note to financial advisors: this fee destruction is referencing pure asset management. We’ve said for a long time if you offer additional value added services you can we worth that 1% and your weight in gold, but the value is not in the asset management side…)
May 30, 2017 at 08:17AM Buying Happiness & Well-Being With Cash-On-Hand Reserves
Except a recent research study by Ruberton, Gladstone, and Lyubomirsky finds that maintaining a healthy level of cash-on-hand (or at least in a checking or savings account) appears to improve our feelings of financial well-being and life satisfaction. And the relationship holds up even after controlling for income, spending, and other investments, as well as age and employment status. In other words, no matter how much total wealth and income we have, we’re just not as happy unless it’s also accompanied by a healthy pile of cash (or at least, a sizable and readily available bank account).
June 5, 2017 at 08:15AM Thinking Through a Change an Asset Allocation
Any sort of diversification is going to look foolish from time-to-time and it’s even harder to stick with at market extremes when certain investment styles or asset classes are doing particularly well. How many advisors do you think have been asked questions about Bitcoin in recent weeks after the run-up we’ve seen in cryptocurrencies?
June 8, 2017 at 08:23AM The questions we hear all the time
The questions we hear all the time goes back to that uncertainty issue: What’s the Federal Reserve going to do? How many rate hikes this year? Where’s the Dow going to be in 12 months? What’s your favorite stock pick?
All those questions are things that you as an investor simply are not going to be able to answer with any degree of accuracy—it’s really a crapshoot. And so, rather than guessing, wasting a whole lot of psychological emotion and energy on it, why not just recognize—and, again, it’s with great humility—recognize what we do know and what we can’t know—and try to adjust accordingly. This leads quite naturally to a portfolio that is balanced and robust enough to withstand the regular market turmoil.
Over the past 20 years, how many market booms and busts have we seen? There was the dot-com boom and bust; the 2008–2009 financial crisis. There have been several 20% pullbacks over the past few years. That is simply the normal state of affairs for U.S. markets. Investors must understand that volatility is part of investing; if you learn that truth about markets, it won’t surprise you when it finally arrives and it shouldn’t disrupt your sleep too much
June 9, 2017 at 05:40AM QOTD: The Financial Pain Equation
Acknowledge, allow and accept. This advice will help you to endure the inevitable pain caused by the next bear market. Experts in the centuries-old practice of meditation have a formula for suffering.
S = P x R. The amount of suffering you experience is equal to the actual Pain (P) times the mind’s Resistance (R) to the pain. So, S = P x R. The idea is to stop resisting the pain to lessen it. Since anything that is multiplied by zero equals zero, you see where this is going.
The quicker you realize market corrections and bear markets are not “bugs” in the financial system, the happier you will be. Acceptance of these facts is critical to creating your own form of Advil for financial pain, without the ulcer inducing side effects.