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Last week, I pointed out that experience is a great teacher for those willing to learn. But it can be a slow process at times. The best way to speed it along is to study history.
The best example I have is learning from market extremes. Despite the constant talk of bubbles and crashes, the market spends most of its time away from these extremes. Continue Reading…
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The popular world view is short term and technology has only helped to shrink that view. That’s why being a contrarian to that perspective is a big advantage for investors. But should we pay attention to the short term?
The media has been circling like vultures for an opportunity like this since the last market correction in May 2011 because nothing draws eyeballs like high volatility and a correction. Continue Reading…
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I spent some time Monday morning watching reactions to the stock market. Thanks to social media, everyone has a front row seat to the greatest sideshow on Earth – investor behavior. Monday did not disappoint.
I have two Twitter accounts, one for the site where I follow a wide range of financial types (broken into groups: top finance, financial advisors, value investors, and financial media. BTW, value investors were the most calm – well done!) and a personal account that follows non-finance folks. Continue Reading…
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Football is a few weeks away. For fantasy football fans, that means drafts are starting soon. I thought I’d go slightly off topic, though not really because investing and fantasy sports tend to have similar patterns of behavior.
Put another way, similar mistakes and biases abound in both. So we can take what we know from investing and apply it to fantasy football or vice versa. In either case, hopefully, this post gives you something to think about while you prepare for both. Continue Reading…
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The drivers of total return are dividends and changes in price. Dividends are driven by fundamentals. Price is driven by fundamentals and sentiment.
Fundamentals are the basic measures of business – the growth or decline in revenues, profit margins, earnings, etc. Fundamentals drive long-term returns.
The short-term driver is investor sentiment. By sentiment, I mean investors willingness to pay more or less for current fundamentals. Continue Reading…
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Everyone has their opinions and beliefs. Some are based on facts. Others are based on some aberration of our mind.
Investing is full of facts. The relentless stream of data can be used to argue anything. And it’s used to support every opinion possible because facts can say whatever you want them to say.
Your job and mine is to come to some consensus about what to believe or not. Below, I’ve laid out some of my own beliefs developed over the years. You can decide which is more opinion than fact.