Skill, Luck & Outcomes
Posted by Stephen N Frank AIF® on Mon, 07/02/2018 - 10:53
Most outcomes in life are a culmination of both skill and luck (or bad luck). How much an outcome is influenced by skill versus luck differs among activities. Basketball is dominated by skill…typically you see the best teams win. Roulette is dominated by luck. What about investing?
Investing - Simple Yet Difficult
Posted by Benjamin Kyler on Fri, 06/01/2018 - 10:57
Warren Buffett said, “Investing is simple, but not easy.” Sounds like a contradiction. But in real life simplicity has little to do with ease. Take losing weight. Very simple. Burn more calories than you take in. Easy, right?
Cultivating a 'Firmness of Character'
Posted by Stephen N Frank AIF® on Thu, 02/01/2018 - 12:24
Benjamin Graham said what investors need, but few have, is a “firmness of character.” What he was referring to is the ability for investors to keep their emotions in check.
Investing success is more influenced by DQ than IQ. Our Discipline Quotient, or ability remain disciplined during emotional times, is what sets investors apart. Exercising investment discipline is a difficult endeavor, but it’s not impossible.
A Reliable Forecast for 2018
Posted by Stephen N. Frank AIF® on Mon, 01/08/2018 - 11:59
Before I get into my market forecast for 2018, I want you to consider why forecasts are so alluring to investors like ourselves. What is the force that influences us to make decisions based on forecasts? There is ample evidence that expert forecasts are correct only half of the time, yet we are still attracted to them. Why?
Posted by Stephen N Frank AIF® on Wed, 11/01/2017 - 10:41
We are inundated with information and data these days – most of which serve to distract us from more important things, yet they are effective nonetheless. And for some reason our brain really likes distractions.
Power of Headlines
Posted by Stephen N Frank AIF® on Fri, 09/01/2017 - 11:15
Headlines exist for one reason – to get you to read, click or tune in. The real purpose of headlines is not to inform, it is to get you hooked.
Our brains love headlines! We don’t have a lot of time, and we are constantly being persuaded to look this way or click over here. The brain often lends attention to those things we can learn in two seconds without using any brainpower. Headlines provide that material.
The Value of Cash
Posted by Stephen N Frank AIF® on Mon, 07/24/2017 - 09:34
As investors, we have great difficulty valuing cash correctly. We take shortcuts and seldom analyze things from more than one point of view. Understanding the value of cash, from different angles, can help you make better decisions with your money.
What’s The Yield?
Can You Hold a Winning Asset?
Posted by Stephen Frank on Wed, 05/31/2017 - 14:56
It is every investor’s dream to invest early in a company such as Microsoft, Apple or Amazon. Oftentimes the media reports on how much we would have made had we invested early on. For instance, a $10,000 investment in Amazon at its IPO would be worth $4.9 million today (49,000% gain).
Market Indexes Aren't Diversified as You Think
Posted by Stephen Frank on Mon, 05/01/2017 - 10:30
It is very common in our industry to compare personal portfolio returns to indexes. Two of the most common indexes referenced are the S&P 500 and the Dow Jones Industrial Average, also known as “The Dow”. Investors compare personal return to indexes, or benchmarks, to give them a sense of whether the portfolio is doing as it should…kind of a check and balance. That is a reasonable use of indexes, but unfortunately many investors are taking it too far.
Selecting Your Investment Benchmark
Posted by Stephen Frank on Tue, 03/07/2017 - 15:11
Investors often compare personal portfolio performance with some stock market index, a benchmark. While the comparison may be easy to make, it is seldom a valid comparison. What we are actually doing is comparing apples to oranges.