Many individual investors have been frustrated by the growing prominence of High Frequency Trading. Complicated algorithms can process new information and react in fractions of a second. It sounds intimidating, and in some sense, it is. Individual Investors would be poorly suited for direct competition. Instead, stick to what the market is giving you. The […]
Here is the key concept: Abandon that which is not helpful! Background One of my best friends loved “investing” in baseball. He had an opinion about every team and every game. He also had a happy bookie. He called me after taking a course in baseball betting. He explained that you could improve your results, […]
There is a lot of recent buzz about active management – basically showing that excellence is difficult to achieve. The conclusion is popular, especially among those who have no aspiration to beat average. I cannot do this in a single post, but I must start somewhere. As I often do, let me start with something […]
Individual investors are intensely focused on the concept of risk. And why shouldn’t they be? Finding an appropriate level of downside risk is paramount. However, too few give equal weight to the potential upside risk in their decisions. Permabears and doom-and-gloomers often watch from the sidelines as the market rallies beyond the fear of the day. […]
Most thoughtful investors know and understand the concept of confirmation bias. Very briefly put, we selectively perceive and choose evidence that supports our existing beliefs. It is a powerful natural process. Everyone is susceptible. Morgan Housel has a good challenge: “What’s something you strongly believe that’s likely wrong?” He has a wonderful description of […]