I’m confused by a lot of things in investing, but the enduring influence of market forecasts is the one that stumps me the most. Year after year, expert predictions, estimates, forecasts and projections prove to be profoundly wrong. And yet next year we seek them out again. It’s like repeatedly pounding your thumb with a [...]
Larry Swedroe’s new book, Investment Mistakes Even Smart Investors Make and How to Avoid Them, includes 77 common behavioural blunders. I don’t think there’s anyone alive who hasn’t made at least a dozen of them. In fact, I know two investors who recently fell prey to Mistake 11—and one of them was me. Mistake 11 in [...]
It’s hard not to respect Andrew Hallam. I first learned about him in the pages of MoneySense, where he described how his investment club (made up of fellow teachers) had beaten the S&P 500 year after year. Hallam eventually amassed a portfolio worth more than a million bucks on a decidedly modest salary. But that’s [...]
I can’t seem to get my kids interested in index investing, but they do share my love of baseball. So last week I took my daughter to see Moneyball, based on Michael Lewis’s book of the same name. She was mostly interested in Brad Pitt, but that didn’t stop me from lecturing her about the lessons the [...]
You can double your investment returns with a one-two punch. One, understand how the market really works. And two, realize how your own actions are working against you
We’re accustomed to thinking of choice as a good thing. But behavioural economists now understand that too many options can lead people to make poor decisions—or sometimes no decision at all. In her outstanding book The Art of Choosing (Twelve, 2011), Toronto-born Sheena Iyengar shares a story about how this affects investors. In 2000, Iyengar, a professor [...]
Among academics, the active-versus-passive debate often centres on mutual funds. But among DIY investors—who readily concede that mutual funds with high fees are unlikely to outperform an index strategy—the discussion usually focuses on stock picking. Many people who shun mutual funds believe that building their own portfolios of individual stocks offers a high likelihood of [...]
I’ve never been shy about criticizing actively managed mutual funds, but I’m starting to think this debate is getting old. More than that, I feel like it’s driving a wedge between people who should be allies. So let me be the first to extend an olive branch and say that the active v. passive debate is [...]
On Monday, I asked readers to consider whether even index investors would benefit from the services of a financial advisor. Most of those who left a comment seemed to agree that the right advisor could add value, although committed DIY investors expressed their doubts. The most interesting response I received came from a financial advisor [...]
Whenever I write about indexing with an advisor, I get questions from readers who wonder why passive investors would work with a professional. After all, in most cases, you’ll pay an advisor about 1% to 1.5% of assets under management—and that’s on top of the MERs on the ETFs or mutual funds. Index investors, who [...]
