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.

S&P 500 After Multiple Losing Years

We don't have to be smarter than the rest. We have to be more disciplined than the rest.The S&P 500 doesn’t lose often. It’s only seen 24 losing years from 1926 to 2014. Roughly one out of every four years ends in a loss. Too bad that doesn’t happen like clockwork.

The S&P has gone on a nine year stretch without a loss and its had periods of multiple losses in a row. In fact, half of the losses were involved in multi-year losing streaks.

The infrequency of losing years doesn’t make it easy on investors. It allows you to get comfortable, too comfortable sometimes, or comfortable enough to forget about what the last loss did to your psyche and your savings. Continue Reading…

The Art of Losing Money

If we avoid the losersAny chump can bet all their money on a single stock and get wiped out. But it takes a special kind of genius to invest and consistently lose money in the market. They follow one mistake with another, compounding their losses with opportunity cost. To avoid the same fate, we can steal a few lessons in how to lose money from the great investors who came before us.

Warren Buffett repeats his two simple rules often:

Rule No. 1: Never lose money. Rule No. 2: Never forget rule No. 1.

Easy enough. I use the same rules in Vegas and I swear it never fails.

But you know better. Right?

Never losing is impossible. Anyone who tells you different is lying. The great investors know losing is part of investing. They lose money better than anyone. Continue Reading…

Updated Asset Class, Sector, and Country Returns for 2014

Who guessed long-term Treasuries would be the best asset class to own? That 2014 would be the year of the REIT? Or Utilities, the most boring sector ever, would sit on top of the S&P. If anything, last year’s end results prove again – you’re better off with a long-term perspective because trying to predict the next six to twelve months is down right hard. And tweaking your portfolio because of short-term predictions can get messy.

Had you guessed, and acted on, 2014 being the year of falling interest rates, a stronger dollar, crashing oil, and geopolitical risks, then you had a great year. Had you guessed wrong, it could look terrible.

But if you stuck with a diverse portfolio you had another decent year. The good thing about decent years – they’re never great or terrible but they add up over time. Continue Reading…

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…