Posts filed under “Apprenticed Investor”

Cheap & Simple Beats Costly & Complex

returns

 

Have a look at the tables above showing the performance of various investments during the five years leading up to the financial crisis lows, and the five years after. It leads us to a rather fascinating exercise, looking at complexity, cost and performance.

Let’s start with the worst performers pre-crash: US Real Estate and Equities. Prior to the collapse, stocks had nearly doubled (March 2003 to October 2007). Note that doubling began just 3 years after the tech/dot com implosion. The peak to trough collapse of the S&P500 is even worse than that five-year track record suggests, falling 57% in about a year and a half ending March 2009. Ouch.

The Real Estate collapse was even worse: Off 58% in that five-year period. Perhaps a  little context might help. Residential real estate was fairly flat (in real terms) from 1986-1996, before moving upwards until the end of the century, then exploding from 2001-06. Vacancy rates for office space in the 1990s was near zero; Shopping malls were getting built and sold off to REITs soon as they opened. Commercial real estate boomed in the 1980s, 1990s and early 2000s as real returns on fixed income was falling. The ROI for commercial real estate – and the low cost of capital – attracted lots of buyers looking for alternative to low bonds yields.

Continues here

Category: Apprenticed Investor, Commodities, Hedge Funds, Investing

What’s the problem with 401(k)s? You.

There’s nothing wrong with 401(k)s, except the players involved Barry Ritholtz Washington Post March 9, 2014     This past year has seen a firestorm of criticism casting 401(k)s as mostly terrible. Their performance is too poor, and the fees too high, with poor investment choices built into most of them. Typical plans are complicated…Read More

Category: 401(k), Apprenticed Investor, Investing, Psychology

What Is Your Focus: Outcome or Process?

Outcome or process — what investment focus succeeds over time? Barry Ritholtz, Washington Post, February 23 2014       “The reason investors and the investment industry rely on performance is because it’s simple, objective and easy to measure. But more importantly, performance goals, performance reviews and performance measurement are so common in business, in…Read More

Category: Apprenticed Investor, Psychology

What Kind of Investor Are You?

>   My Sunday Washington Post Business Section column is out. This morning, we look at the differences between Outcome or Process focused investors. The print version had the full headline Investing’s smart minority: The process people while the online version Outcome or process — what investment focus succeeds over time?. Here’s an excerpt from the…Read More

Category: Apprenticed Investor, Psychology

Nine Surprising Things Jesse Livermore Said

There are those who would convince you that it is somehow smart or in your best interest to be manically switching your investments around, back and forth, long and short, on a daily basis. To pay attention to this kind of overstimulation is the height of madness, even for professional traders. The most storied and…Read More

Category: Apprenticed Investor, Trading

My motto: ‘Fresh mistakes, every year’

My motto: ‘Fresh mistakes, every year’ Barry Ritholtz Washington Post February 9 2014     “More than anything else, what differentiates people who live up to their potential from those who don’t is a willingness to look at themselves and others objectively.” — Ray Dalio, Bridgewater   Once again, it is the time of year…Read More

Category: Apprenticed Investor

Your Ideology Is Killing Your Portfolio

“It’s going to blow up the deficit, won’t create any jobs and will cause all sorts of other problems.” A hedge-fund manager was lecturing me about the Jobs and Growth Tax Relief Reconciliation Act of 2003, better known as the Bush tax cuts. I had been suggesting that this fund close its short positions on…Read More

Category: Apprenticed Investor, Investing, Politics, Psychology, Really, really bad calls

Mea Culpas: ‘Fresh mistakes, every year’

>   Its my annual mea culpas column for the Washington Post Business Section column. Here’s an excerpt from the column: “Once again, it is the time of year when I look back at the various investing, trading and other mistakes I’ve made. (Last year’s version is here; prior years can be found here). Why…Read More

Category: Apprenticed Investor, Philosophy

Google’s Nest Labs Acquisition is a Smart Move

Defense! Google’s Nest Labs acquisition is a smart move Barry Ritholtz Washington Post, January 26 2014     With the Super Bowl just a week away, the age-old question of whether offense or defense wins big games is at hand. “The best defense is a good offense,” goes the saying, with the Denver Broncos called…Read More

Category: Apprenticed Investor, M&A

Crashes, Corrections & Sentiment

On Monday, we saw a sell-off of more than 1 percent across major U.S. markets. Europe and Asia followed suit the next day. Judging by my e-mails I received, this was it, the beginning of the end, and “you unrepentant bulls are finally going to get what you deserved.” Except not quite yet. Tuesday and…Read More

Category: Apprenticed Investor, Markets, Trading