Investing Lessons From Ted Williams

Fat PitchBaseball is one of the few sports where you can fail 70% of the time and still have a great year. Players are paid millions to do just that. And the mutual fund industry follows a similar model. But I digress.

Only 13 MLB players have breached the .400 barrier since 1900. In 1941, Ted Williams hit .406 while the league average was .262.

He was the last to do it. He was one of the greatest hitters ever because of his tireless work ethic, obsession for hitting knowledge, and discipline.

Over time, Williams simplified his batting process down to only swinging at good pitches he could hit. He stacked the odds in his favor.

First You Need a Good Ball to Hit

Always a fan of analogies, Buffet uses Williams’ process to explain his investment philosophy: Continue Reading…

Investor Returns When the Market Seems to Go Nowhere

Show a chart of a bear market and I guarantee someone will say:  The market went nowhere for years. What a terrible investment! Who would want to own stocks that long just to break even? How are you supposed to make money if it happens again? 

Of course, it’s true. The market did go nowhere. Invested money went somewhere. An index, like the S&P 500, is not the same as investor returns.

To the untrained eye, the assumption is investors made no money during that time. I’m sure many investors didn’t. But some investors did. And neither’s returns looked anything like the chart. Continue Reading…

Asset Class, Sector, & Country Returns for 1H ’15

I update the asset class, sector, and country returns twice a year – at the half way point and year end. The end of June means it’s time for an update. But before I get into the actual results I want to point out a few things to take notice of beyond the numbers.

The charts are a simple visual tool that helps to explain a few simple concepts like how returns change from one year to next, how a diversified portfolio gives up the best returns in order to never get the worst returns, and how so many investors fall victim to chasing the past. Continue Reading…

How a Fed Rate Hike Affects Stocks

The hints of a Fed rate hike have been fairly constant since before the year started. The earliest guesses wrongly put the hike in June. Some have said September. The reality is nobody knows. It’s that uncertainty that gets people worrying about how it will impact their portfolio.

The funny part about all this is people have complained about low rates for six years. Now people are worried about getting what they wanted. But at what cost? Continue Reading…