Liquidity is a short term risk. If you want to sell now, and nobody wants to buy, then you have liquidity risk. You have to lower the price until it’s attractive enough for someone else to buy it.

The issue with ETFs, index funds, and even actively managed funds, is the false impression that these funds are highly liquid when in fact they are only as liquid as the underlying assets. A high yield bond fund has the same liquidity risk as the bonds it holds. A microcap fund has the same liquidity risk as the microcap stocks it owns. Continue Reading…

If you’re staring at your portfolio thinking now is the time to make some changes, I can say with almost absolute certainty you’re wrong.

A lot of people are thinking the same thing. It’s a popular view at the moment. That might sound like good news but it’s not. Following the popular path – where thinking and behavior are concerned – rarely ends well. Continue Reading…

I started rereading The Intelligent Investor this week and wanted to share a quote. The discussion revolved around the view at the time – this was about 1970 – that investors should consider an all-stock allocation due to the worry of higher inflation.

Of course, there’s always something to worry about and Graham’s answer fits a broader allocation question that gets asked all the time – should I own more or less of something else because of the worry of the day? Continue Reading…

We’ve come to expect good instant results. You can get everything you want (well…almost) either instantly or within the hour thanks to the on-demand economy. And if you can’t get it, I’m sure Amazon will eventually make it happen, with one exception – investment returns.

On-demand returns don’t exist. Accept it.

Impatience has no place within investing. You have to wait for good returns. Continue Reading…