What’s the biggest determinant of investing success? Smarts, information, strategy, or skill are all worthy possibilities.

But one stands out above all the others:

The truly successful stock market investors of history have been no more intelligent than most less successful investors. In most instances — they have had no better sources of information than other investors. The qualities they have had in common have rather been qualities of temperament, which is why no one has ever found out how to get rich by taking courses or reading a book or reading articles (including this one). But those temperamental qualities are crucial and relate to the points I have been trying to make here: the road to success in investing is paved with independence of spirit, decisiveness, and the courage of one’s convictions. — Peter Bernstein

The market naturally triggers emotional responses that lead to mistakes. Those best equipped to handle those triggers are more likely to succeed.

That shouldn’t come as a surprise. Most things in life worth achieving require mental toughness to get through the obstacles that are certain to arise. And investing is full of obstacles. Continue Reading…

In investing, nothing is written in stone. Yet, investors often operate as if the opposite is true…to their own detriment.

One mistake investors make is to focus too much on the averages of history while ignoring the deviation from the averages that always seem to happen in the short term. The clearest example of this is the stock market itself, via the S&P 500. It’s never, not once, earned its average annual return in a single year. Check for yourself.

Then there are the investing rules of thumb we all rely on because they work…most of the time. The mistake, of course, is to never question them.

Peter Bernstein reiterates this point in summing up market history. Investing is guided by the past but the future is not limited to what has already happened. A level of uncertainty, however small, always exists that can surprise us: Continue Reading…

April’s unemployment numbers jumped to 14.7%. The market was up 13% in April!

Earlier this week, Disney cut its dividend after reporting a 93% drop in earnings. The next day, it’s stock was up 4%!

How can the market move higher with so much bad economic news around? It defies common sense. Or does it?

If you’re confused about what’s going on in the stock market, I thought I’d add to it with some help from Peter Bernstein: Continue Reading…