Long-Term Investing: Avoiding the Urge to Trade

Diversification and Long-Term Investing can help you achieve investment success

It’s easy to talk about ignoring short-term market events and to recommend focusing your attention on the market’s long history of positive returns. It’s another thing entirely to sit through the daily volatility of the market, watching your account values jump around, without succumbing to the temptation to trade your portfolio holdings. The urge to… Read More

The Power of Effective Diversification: Part II

Geoff Considine

Last week, I posted an article discussing how diversification is one of the most misunderstood concepts in investing. In today’s post I continue with the second half of this two-part series titled, “The Power of Effective Diversification.” In Part I of this article, I discussed the difference between naive diversification (holding lots of stuff in a portfolio)… Read More

Investors’ 10 Most Common Behavioral Biases

Robert P. Seawright

Barry Ritholz (of The Big Picture and a Sunday Business columnist at The Washington Post) recently contributed Investors’ 10 most common mistakes to The Washington Post Business Section quarterly investing section. It’s a commentary that he has been working on for a while — the ten topics are listed with links to longer discussions of each common mistake here. I created my… Read More

Sector Watch: Low-Beta Stocks

Geoff Considine

Financial theory suggests that risk and return go hand-in-hand: Small company stocks tend to be riskier and outperform large company stocks. Long-term bonds tend to be riskier and outperform short-term bonds. Corporate bonds tend to be riskier than Treasury bonds (with comparable terms) and outperform Treasuries over time. However, there is one group of stocks… Read More

The Pension Dilemma

Michael Lewitt

America’s largest pension fund, the California Public Employees Retirement System (CALPERS), reported a 1% return on its investments for the 12 months that ended June 30, 2012.  This disappointing return fell woefully short of the plan’s target return of 7.5%. An analysis of the plan’s returns by asset class showed the following: Public Equity –  7.2%… Read More

Emerging Market Indexing

Matthew Amster-Burton

Let’s say you want to build your own stock market index fund based on the S&P 500. Easy: download a list of all the companies in the index–from 3M (MMM) to Zions Bancorp (ZION) and their market cap, and start investing. Every stock in the index will be easy to buy in whatever quantity you… Read More

Sector Watch: Spotlight on BioTech

Geoff Considine

The challenge for many investors who are trying to diversify their portfolios is finding sectors or asset classes that don’t move in tandem together. One sector that has moved up—even as many equity indexes have fallen—is biotech. Performance: Behind the Numbers Over the past three months, even as the S&P 500 and other broad market… Read More

Why Bond Yields Scare Me More Than Friday the 13th

Geoff Considine

Stock investors generally don’t have much to fear on Friday the 13th. Historically, Friday the 13th is a relatively calm day for stocks. Jason Zweig, who writes The Wall Street Journal’s Intelligent Investor column, says it’s usually a good day for investors and says superstition about trading on this supposedly unlucky day is one of… Read More

Stocks and Shocks: What to Do?

David R. Kotok

How do we avoid walking into a “left hook” in the markets? That was the discussion this week during a client review. “Can’t you see them coming and avoid them?” he asked. Well maybe some folks can, but the issue of investing with possible shocks as an outcome is a very difficult one. “Do you… Read More