Jane Bryant Quinn, a highly regarded and nationally syndicated columnist, once called much of the output of Wall Street and the trade publications that cover financial markets “investment porn.” She summed it up this way: “Americans are indulging themselves in investment porn. Shameless stories about performance tickle our prurient financial interest.” The roller-coaster swing of…
Are you a value investor or a growth investor? Could your preference be influenced by a biological predisposition partially ingrained from birth? Is it possible that your choice of investment could be explained by your personal experiences, both early on and later in life? The field of behavioral finance advances psychology-based theories to explain investor…
Is it time for stock-pickers to make a comeback? That was the topic of discussion during a recent Trading Nation segment in which CNBC’s Brian Sullivan interviewed Stacey Gilbert of Susquehanna, and Phillip Streible of RJO Futures. Gilbert and Streible made the case that because the correlations (a measure of the strength of the linear…
Almost 10 years ago, I knew a guy on a financial rocket ship. He had a great house, a successful business and a solid income. But then things changed. With the benefit of hindsight, it was clear he bought a little too much house and spent a little too much money. At the beginning, he…
While it’s a low bar, Bloomberg TV always seemed to me to be the best of the financial media. Its anchors are professional and knowledgeable. Its coverage is broad and responsible. It avoids the hype and sensationalism typical of many of its competitors. Bloomberg recently launched a new morning program, Bloomberg Go. It features some…
Behavioral economist Richard Thaler explains why financial professionals need to be familiar with psychology. Daniel Kahneman and Amos Tversky legitimized behavioral economics—the study of how people really behave around money, as opposed to how economists say a rational person ought to behave. Then Richard Thaler and Cass Sunstein applied the lessons of behavioral economics to…
While the debate over the merits of active versus passive investing is ongoing, there has been a very clear trend spanning several decades now showing that investors are slowly (but steadily) abandoning the hope of outperformance offered by active management in favor of the certainty of earning market returns (not average returns) offered by passive…
Quick Take on Fixed Income November 2015 Question: What are agency bonds? Answer: Agency bonds are securities issued by two types of entities: 1) government-sponsored enterprises (GSEs), which usually are federally chartered but privately owned corporations; and 2) federal government agencies which issue bonds to finance activities related to public purposes, such as increasing home…
November 2015 How These Changes Could Affect Your Future Filing Strategy Establishing a well-crafted plan that addresses the role Social Security retirement benefits will play in your financial future has never been more important, especially in light of recent changes to how these benefits are administered. On Nov. 2, 2015, President Barack Obama signed into…
Quick Take on Fixed Income November 2015 Question: What are corporate bonds? Answer: Corporate bonds are debt securities issued by corporations. The bonds have a maturity greater than one year, and interest income is taxable at local, state and federal levels. These bonds are the obligation of the issuing company, which can issue many bonds…
Imagine a hypothetical guy who lives a responsible financial life. He’s focused on meeting his obligations, even though he doesn’t have a big cushion when it comes to his take-home pay. Things are tight. He’s not quite living paycheck-to-paycheck, but it’s close. Then one day, an external shock completely outside his control occurs, and it…
“It was totally worth it.” In this case, “it” referred to a Vitamix blender that a friend recently had purchased. He wasn’t the first. Indeed, I don’t know anyone who has purchased a Vitamix blender and didn’t share my friend’s effusive sentiment, even after spending between $429 and $719 (for the new line of G-Series…
Quick Take on Fixed Income November, 2015 Question: What qualifications are required for a municipal bond to meet our buying parameters? Answer: While there have been few defaults in the municipal market, it’s important to note that not all muni bonds are created equal. The market offers many different types of bonds backed by varying…
This document covers several key issues as you plan for retirement and is divided into four sections: Section 1: Determining How Much to Save and Spend Section 2: Portfolio Management Section 3: Risk Management Section 4: Maximizing Social Security Benefits Section 1: Determining How Much to Save and Spend Estimating a Retirement Spending Amount If…
I’m a huge advocate of the “no shame, no blame” rule when it comes to money. But I think there’s some confusion about how the rule works. It’s not that you won’t feel guilt. It’s also not about avoiding responsibility. Instead, it’s about recognizing the zero-sum game of relying on shame and blame to make…