Posts filed under “Investing”

Annualized Returns & the Average Investor

annualreturns

Source: JP Morgan Guide to Markets 2Q|2014

 

Have a look at the chart above. It is from the quarterly chart book from JPM (which I have been referencing for years).

Average annual returns for individuals over the past 20 years? 2.3%. That fails to even keep up with inflation. REITs, commodities, equities and even bonds all wildly outperform the average retail investor.

The bottom half of this graphic shows what happens when investors are left to their own devices: They engage in emotional decision-making (AKA Fear & Greed), they “performance chase,” they fail to have any form of risk management in place, pay high fees, and exhibit an almost willful lack of discipline.

 

Continues here

 

 

 

Read More

Category: Investing, Really, really bad calls

What You’re Hearing Is Noise

In a new project at Bloomberg I will interview some of Wall Street’s most influential thinkers. I’ll share more details with readers when we get closer to a launch date, but several consistent themes have become clear to me, even at this early stage. The one I want to discuss this morning is the concept…Read More

Category: Apprenticed Investor, Cognitive Foibles, Financial Press, Investing

Game Theory for Bulls & Bears

“Capitulation” is the term used to define a selling climax that often marks the bottom of a bear market. It translates into “surrender” — giving in to the overwhelming need to just make the pain stop. Retail brokers tell tales of individuals bailing out, often saying things like, “Just sell, get me out, please make…Read More

Category: Cycles, Investing, Psychology, Rules, Trading

NFP Day? Try Doing Nothing

While I have been busy kvetching about the weather, another payrolls report has snuck up on us. Estimates are for a 200,000 increase in nonfarm payrolls, the most since November, according to the median forecast of 90 economists surveyed by Bloomberg. But really, I have to ask: Why do you care? As I have relentlessly…Read More

Category: Apprenticed Investor, Employment, Investing

What Will Trigger the Next Stock-Market Rally?

Laurence Fink, chief executive officer of Blackrock Inc., the world’s largest money manager with more than $4 trillion in assets, recently issued a warning to U.S. companies: Stop focusing on short-term returns at the expense of longer-term investments. “It concerns us that, in the wake of the financial crisis, many companies have shied away from…Read More

Category: Buybacks, Corporate Management, Dividends, Investing

BlackRock’s Fink on long-term growth strategies

Category: Investing, Think Tank

Irrational Non-Exuberance

The endless chatter of bubbles and crashes continues unabated. Eventually, all bull markets come to an end, and this one must eventually as well. But as I sit down to write this, the Standard & Poor’s 500 Index yesterday hit yet another all-time high. U.S. markets continue to have good internals, strong breadth and broad…Read More

Category: Investing, IPOs, Markets, Psychology

Stocks in 2014: So far, so meh

Autoplay after the jump.

Read More

Category: Investing, Markets, Video

Are Stocks Pricey or Cheap?

How to know whether stocks are cheap or pricey Barry Ritholtz Washington PostTerms March 23, 2014     Last week, the Fed shared some widely expected news: It will taper more — keeping up a policy of slowly reducing its bond-buying program with the goal to wind it down by year’s end. It has telegraphed…Read More

Category: Apprenticed Investor, Investing, Valuation

The DJIA’s 22,000 Point Mistake

The Dow Jones’s 22,000 Point Mistake Bryan Taylor, Ph.D., Chief Economist, Global Financial Data One of the long-term components of the Dow Jones Industrial Average has been IBM. The company was originally added to the Dow Jones Industrials on March 26, 1932 in a reshuffle involving eight stocks including Coca-Cola, Nash Motors (later American Motors)…Read More

Category: Index/ETFs, Investing, Markets