One of the most important factors of investment success, and one of the most overlooked, is the thought process that governs the portfolio management itself. Ultimately, this thought process resides in the brain of a single individual for any given portfolio, and yet most investors have never met that individual or had any opportunity to learn the...
Thursday, March 26, 2009
Paying yourself first
As investors survey the damage caused by the financial panic of 2008 and the ferocious bear market which accompanied it, the question of what they should do differently going forward is a very significant one.There are plenty of areas that can yield valuable insights, and we have visited this subject several times before, in posts discussing some...
Tuesday, March 24, 2009
Dent vs. Schumpeter . . . and Kurzweil
The feverishly anti-business tone coming out of Washington, as well as the promise of greatly expanded government intrusion into industries from health care to energy, the prospect of significantly higher taxes in years ahead, and the threat of tremendously expanded government spending and budget deficits, has many investors wondering if we are heading...
Tuesday, March 17, 2009
Don't despair
These days, it is easy to believe that the entire American system is doomed to collapse into an economic swamp of no return. The headlines give us a daily overdose of politicians railing against profits, bonuses, Wall Street, greed, and incompetence, and Americans for the most part are overwhelmingly sick of bailouts and TARP money and Washington...
Friday, March 13, 2009
Big news on mark-to-market accounting
Yesterday was a momentous day. The press chose to focus more on the emotionally-charged story of Bernie Madoff pleading guilty to a Ponzi scheme and being sent (at last) to his new jail cell, but the bigger story was about an accounting rule that few Americans really find interesting or understand completely. This accounting rule has caused far more...
Wednesday, March 11, 2009
The Bottoming Process
The markets turned decidedly ugly again in the last couple of weeks and the major market averages have reached new bear market lows. Is this the bottom? That is the question being asked in just about every financial market conversation either in media or around the water cooler. The answer is simply: we don't know, nor does anybody else. It should...
Monday, March 09, 2009
If portfolios were parachutes
If investors thought about the assembly of their investment portfolios as if they were packing a parachute, there would be several helpful lessons that they might learn from that mental exercise.First, while some investors may have been somewhat cavalier about who was packing their portfolio "parachute" prior to the current bear market, 2008 probably...
Monday, March 02, 2009
Don't get off the train
We used to say "You have to stay on the train." As you can see from the video above of a Caltrain "baby bullet" going by, when it gets moving you can't jump on very easily!The same is true of markets.We have argued several times before that this is where investors make their most damaging mistakes. Research bears this out.As unbelievable as it...
