Category: Investing
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Hiding behind the tools
The practice is always more important than the tool. Tools should be taken care of, tools will become more useful over time at the margins as practitioners get better, and periodically a tool will even become revolutionary, but the truth remains: the practice is more important. It’s important to remember…
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A dangerous cocktail
There are many dangerous cognitive/statistical cocktails, but surely one of the worst is made when we combine recency bias (the cognitive tendency to believe that the way things have recently been is the way they will continue indefinitely) with mean reversion (the statistical tendency for some price or performance measure…
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Free lunch
It’s amazing how often we are tempted to hold on to over-concentrated and risky positions given that: 1. There is an overwhelming body of research showing we take losses to heart much more fully than we appreciate wins, 2. The likelihood of a win for a particular stock is small,…
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Tracking error
Investing and tracking the performance of your investments are two very, very different things, and the less time you spend on the latter, and the more regularly you commit to the former, the better off you will be. Investing is essentially taking money that you would have either spent on…
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Giving Tuesday
I grew up in a home where generosity was such an integral part of our reality that it was hard to identify on its own. What I mean is, if my family was a soup, and you asked me to strain out the generosity in the soup, I couldn’t. It was…
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Jürgen Klopp and investing the right way
I watched a little soccer this past weekend, and happened to see a short interview of Liverpool’s coach Jurgen Klopp just before their match against Southampton. In it he said something that very well could have come from the mouth of Charlie Munger: People keep talking about momentum and the…
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When easy is very bad
I spent part of this past weekend in Mobile, Alabama celebrating my grandmother’s 90th birthday. Now, you must understand something about my grandmother’s house: there are always pound cakes. I have never visited my mom’s mother and not seen a homemade pound cake on the kitchen counter. Never. It’s one…
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The problem with financial drugs
I wrote yesterday about the problem with one-time advice, and drew a parallel there between going to the doctor and getting financial advice. Today, in the spirit of follow-up posts, I want to draw another parallel between the practice of medicine and the financial services industry. So first, a story.…
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The problem with one-time advice
I wrote awhile back about my ten-year gap between doctor visits (I have since been to the doctor, thank you). But you know, going to the doctor for a checkup gets increasingly less useful the further you get past that visit. You got a clean bill of health when you went…
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Why giving matters
My wife works for the YMCA in downtown Raleigh, which is the greatest YMCA in all the land. (Yeah I’m biased; so are you.) Anyways, every year around this time the YMCA raises gobs and gobs of money to help to kids in Raleigh who generally don’t get much from their…
Meaningful Returns 