I was a young equity analyst at one of the largest mutual fund firms in the country. It was the week before Christmas in 2002, and my most important stock recommendation to the firm’s portfolio managers had just declined by 50%. In one day.Read More
Your money is unlikely to last you as long as most savings withdrawal calculators will tell you. That famous 4% withdrawal rule? Not so fast, especially not in the current environment. Before you entrust your retirement to some over-simplified rule of thumb, you should understand what’s really involved and what you need to know in today’s low-return investing climate.Read More
Earlier this year I gave a talk to students at Babson College on how to learn value investing and become an investor. You can watch the talk and the Q&A discussion that followed in this video.Read More
“It’s different this time.” This phrase has likely cost many investors far more than they realize. Each period of time is indeed different. However, there are many insights that we can learn from history that should inform how we invest today. Failing to learn from the past mistakes of others can be hazardous to your wealth.Read More
Before you succumb to the charms of a charismatic management team or fall for someone pitching you on another “story stock,” read the skeptic’s checklist. It won’t give you all the answers, but it will give you a fighting chance against the biases that you are likely frequently exposed to.Read More
Conviction is a necessary quality for any investor – lack thereof can lead to an inability to stay the course on a successful contrarian investment. Yet without flexibility investors can easily fall prey to various behavioral biases such as anchoring and overconfidence and fail to correctly change their minds when the evidence merits doing so.Read More
- Don’t invest in anything that you don’t understand. Yourself. Not because someone sold it to you or because others are doing it.
- Don’t pay high fees for investment products unless you know why the product is worth it. Many are not.
Conventional financial wisdom considers volatility to be one of the greatest risks in investing. A small minority of investors, mostly among value investors – a group to which I belong, take a completely opposite view and believe that it is the probability of permanent capital loss, not volatility that constitutes risk.Read More
If you have been paying any attention to the rising stock market in the last couple of years, you might be tempted to succumb to this siren-song and relax your investment criteria in order to join those appearing to make money quarter after quarter in high-expectation growth stocks. Don’t… at least not until you read this article.Read More
Listening to Warren Buffett, Charlie Munger and other smart investors over the course of the weekend surrounding the Berkshire Hathaway meeting in Omaha is always informative. Below I examine my 10 insights from this year’s trip, which are a combination of new ideas and helpful reminders about those from the past that are still important today.Read More
For a taxable investor, the pre-tax rate of return is not the whole story. The tax efficiency of how that pre-tax return was generated will have a large impact on the after-tax rate of return and the ultimate wealth of the investor. Long-term investing naturally results in very tax-efficient returns. The same pre-tax rate of return over 30 years achieved in the most tax efficient way could result in you having more than 2.5 times more than you would have had if your returns had been completely tax-inefficient.Read More
Having a long-term time horizon can help you avoid making poor short-term investment decisions. A multi-year time horizon can also give you an advantage toward achieving superior returns by allowing you to make high-potential investments that others with a shorter timeframe would avoid. This article will elaborate on why being a long-term investor can help you achieve better returns, and illustrate how you can go about doing so.Read More
Passive investing – replicating the market’s returns through low-cost index funds or exchange-traded funds (ETFs) – has finally gained a meaningful share of the market. However there are still many investors who attempt to beat the market by investing with higher-fee active investment managers or directly in individual securities.Read More