Welcome to the end of the week and another edition of Happy Hour! Just sit back, relax, and enjoy your end of the week roundup of all things interesting in the land of money.
Investing seems to be only place where there’s a constant struggle between optimism and pessimism. The markets are full of both and the media is their battleground. There’s a constant flow of information trying to convince us to one side.
It’s easy to get swept up in the all the short-term rhetoric (the sky is always falling for someone). The odds for long-term success is so much rosier. Most of the time we should just shut it off and focus on the big picture.
The bad habit of selling low and buying high happens a lot. It happened in record numbers this week when many investors dumped their bond funds after the rise in interest rates. This isn’t really a surprise. Many bond funds are down over 10% in the last two months and almost 20% since the 2012 high. Nobody likes to lose money. The first reaction to seeing your investment quickly drop in value is to protect what’s left.
Except it’s almost always the worst reaction. Yet we’re not alone. Every investor makes mistakes. The problem is when we do it too often. So stop making emotional decisions based on short-term information. It hurts your chances of long-term success.
This is just a reminder to the RSS subscribers out there, Google Reader will be shut down on July 1. So far I’ve found Feedly to be a good substitute but there are a number of other alternatives. Of course, the best option is to subscribe by email and never miss another article. Just enter your email address in the box at end of this post.
- The Intelligent Investor: Saving Investors From Themselves – plays off the bad habit of selling low and an all around great read.
- Understanding Your Bond Fund’s Duration – a great explanation of bond duration, the risks, and what you should know.
- Myth Busters: Bond Market Edition – more bond stuff, this time about bond funds versus individual bonds.
- How Interest Rates Impact Banks’ Bottom Line: A Look at History – some great research if our post from yesterday about bank ETFs and stocks piqued your interest.
- How to Invest in Wide-Moat Businesses – great info on wide moat investing and the site becoming a favorite value investing resource.