Posts filed under “Cognitive Foibles”

Pushing Back Against the Big Rally Miss



Two weeks ago, I managed to anger quite a few people with a Washington Post column titled: Missed the big market rally? Here’s what to do now.

There were a variety of perturbed commenters both here and at WaPo as well as angry emails and assorted bemused tweets.

While lots of readers, commenters and emailers “got it,” a great many did not. I was accused of being a shill for Wall Street (never), a perma Bull (Ha!), and a gold hater (I am not enamored of the money losing gold narratives).

Most of those pushing back were in the throes of their own cognitive foibles, and rationalizing their own erroneous investments.

The pushback included these lines from actual emails and comments:

• The only way you did not miss the 150 percent move is if you bought at the bottom and sold at the high and invested 100 percent in the stock market.

• The Fed is printing money, and the Dow is heading to 5000!

• Count on the fact that you are an outsider and not privy to the insiders’ knowledge or strategy.

• What makes you think you know where the markets are going?

• I went to all cash on [the day before any recent market sell-off].

• What should investors do if they missed the move in gold from $250 an ounce to nearly $1,900 an ounce?

• Aren’t you advocating a buy-and-hold approach? I thought you were not a fan of that.

I answer each of these succinctly and IMO, convincingly.

My conclusion could not have been simpler:

“The key to investment success is simple: Have a plan. Follow it faithfully. Max out your tax-deferred accounts. Dollar-cost average. Rebalance. Diversify. And invest for the long term.”

Go check out the full piece.


Missing the big stocks rally: Readers push back
Barry Ritholtz
Washington Post, June 30, 2013

Category: Apprenticed Investor, Asset Allocation, Cognitive Foibles

Morgan Housel Is A Permanent Optimist . . .

  Hey, today we are having lunch with the astute Morgan Housel of MF. I have been enjoying his writing for years now — he is my favorite Motley Fool writer. Here is his very simple explanation for why the end-of-worlders have been wrong, and will continue to be wrong, for most of the future…Read More

Category: Cognitive Foibles, Investing, Philosophy

Polling the Public About Investing Is Loads of Fun!

Back in August of 2011, Gallup decided to do what they do best — which is poll the American public for their thoughts. In this instance, it was their thoughts on investing. The questions asked was simply: What do you think is the best long term investment? Their answers were very instructive: 34% of Americans said…Read More

Category: Cognitive Foibles, Contrary Indicators, Investing, Really, really bad calls

The Ex Post Facto Market Rationale

  Ex Post Facto: from or by subsequent action; subsequently; retrospectively; retroactively. From late Latin, literally, from a thing done afterward     I want to discuss a problem that exists in the narrative form of market commentary, one that I hinted at last night but did not have the time to fully explore in…Read More

Category: Cognitive Foibles, Markets, Philosophy