Investing

Whether you're a beginner or a pro, investing is a lifelong process in learning. Here you'll find a range of investing topics for all experience levels along with recommended investing books for additional learning and helpful investment tools to simplify your process.

In between you'll find actionable tips like picking an online broker, finding a financial advisor, or choosing the right fund for your portfolio.

Picking the Worst Performing Countries

Picking Worst PerformanceWhy would anyone choose the worst performing countries? We know that chasing the countries with the best returns doesn’t pay off.

Mean reversion is tough on investors who ignore their plan and chase returns.

We make it harder on ourselves by investing with a wandering eye. Markets revert because investors act irrationally, ditch their plans at the worst possible times, and chase performance. These investor mistakes are a big argument for a simple buy and hold strategy which works well over time.

What if you tried a different approach? A contrarian might look at the biggest losers. Continue Reading…

Chasing the Best Performing Countries

Chasing Single Country ReturnsA broad index fund is one way to get international exposure in your portfolio, but index funds aren’t perfect. One alternative is to pick single country funds but how do you choose which countries to own?

The problem with picking any fund is our reliance on recent performance. This is a common mistake investors make – chasing returns. Without a plan, the best performing funds are the first ones picked every time.

The investing world we live in tempts us with one, three, and five-year returns on every stock and bond fund around. We love to own what’s going up, we hate to miss out, so we chase returns of the best performing funds of the recent past. Sometimes it works, but not always. Continue Reading…

Equal Weighting International Funds By Stocks vs Countries

Equal weighted fund strategies are the laziest form of active indexing. When you put the least amount of thought into changing an index, the lazy solution is to give every stock an equal say. However, the results show equal weighted funds outperform your vanilla cap weighted funds.

That outperformance is accidental.

Luck would have it that by equal weighting every stock, you accidentally tilt toward factor premiums, like value, momentum, volatility, or size, which can add to long-term performance. I cover this in the smart beta guide. If you weighted stocks alphabetically you’d see similar results. Then the fund industry could charge a premium for ALPHA-bet funds instead.

With international funds, an equal weighting adds risk. I suspect this is one reason the equal weighted MSCI EAFE fund didn’t last long. The side effect of equal weighting international, emerging market, or global funds, is increased country risk. Continue Reading…

10 Lessons Learned From Shelby Davis

The Davis DynastyWho the hell is Shelby Davis? That was my first thought after I heard the name from a reader’s comment on recommended investing books. So I added it to my growing wishlist to check out later. Later finally happened and here’s the answer. He’s probably the best investor you never heard of.

The story of Shelby Davis is reminiscent of today. Interest rates were at all time lows. Bonds were loved and stocks were loathed. Davis did the one thing most investors wouldn’t do. He bought the most hated, boring stocks he could find and stuck with it his entire life.

Davis was an unknown. He didn’t build a company or manage a fund. He avoided the media. He only managed his money wisely. He was THE millionaire next door until the Forbes 400 list of richest Americans outed him in ’88.

Davis lived by the principles we so often forget or ignore. The Davis Dynasty shows us what’s possible even if we get started late. Continue Reading…

Template For the Next Market Crash

Stock Market CrashCrashes happen. That’s a risk we take when investing. Lets face it, most of us are better off not following the daily stock market news. Tuning out is one way to leave your investments alone. Until a crash happens, then it’s hard to ignore.

Some event triggers it all. The media showcases the emotion of the day. It starts with frustration, then worry, moves to fear, until panic sets in. It’s a process that sometimes takes weeks or months.

Headlines spread the scary news. A parade of experts all have THE answer for what will happen next. Each one is different and extreme. All of them are wrong. But it doesn’t matter, they’re “experts”.

Articles rehash the events for weeks, and months, along with every anniversary there after. We give these days colorful names like Black Monday and Black Tuesday. Continue Reading…