In our last post in our investor education series, Active vs Passive: Why the Efficient Market Hypothesis is Wrong, we introduced the concept of rational actors, people that analyze every piece of available information and arrive at an optimal solution to maximize their expected utility, and irrational actors; people that use mental shortcuts and...
There has been an explosion in passive investing strategies over the last ten years. Firms like Blackrock and Vanguard have grown into behemoths, managing trillions of dollars largely on the back of offering very cheap access to markets. For a tiny fee, you can buy a fund that replicates the performance of the S&P...
Volatility First, a quick comment on volatility. During 2018, markets have been more volatile than we have seen for the past several years. This has understandably made many investors very nervous and given commentators a huge amount to write and talk about. However, we must put 2018 into context- for the last few years we...
Most of us have a basic understanding that the future is uncertain. Maybe the stock market will crash tomorrow or maybe a war will break out somewhere. We know that more things can happen tomorrow than will. However, when we look back at yesterday, all we tend to see is certainty. We see the...
We would like to spend the entirety of this first post discussing a reoccurring question we receive: “Why can’t you just ride the market to its peak and then exit right before the inevitable correction?” We understand where this question is coming from. Market timing is an intriguing concept on the surface – if we...
Investors typically focus on returns. ‘How much money am I making’ ‘How much money did I lose’ ‘Am I getting better returns than the S&P/ my neighbor/ the guy on TV’. All of those are relevant questions, but without a consideration of the risk involved, the answers themselves are meaningless. To incorporate the concept of risk...
