Posts filed under “Investing”

Are You a Trader or an Investor?

At the risk of overstating the obvious, there are important differences between traders and investors. Their timelines differ, as do their goals, preferred assets and methods. Yet some of what I have been hearing from members of each group suggests they themselves can sometimes become confused about these dissimilarities. Blame the recent market volatility for this.

Because of my background, I understand both perspectives: I began on a trading desk, where I did pretty well, if you ignore the several times I nearly blew up. Not just money-losing months — all traders suffer through those occasionally. I mean total destruction. Those experiences sent me searching for a better understanding of investor psychology, into a decade-plus doing sell-side research, and ultimately, to the buy side as a money manager.

So I’m familiar with both sides of the aisle, whether it is as a short-term trades or a long-term asset manager. That lets me spot the trouble that arises when I see folks dancing back and forth over that line.

It is an old cliche because it’s true: Trader’s should never let a bad trade turn into an investment; investors should never try to trade in and out or time the markets.

A quick review explains why investors should invest, traders should trade . . .


Continues here: Don’t Even Think About Trading Places in Markets


Category: Asset Allocation, Investing, Psychology, Really, really bad calls, Trading

Investors: Another Chance to Clean Up Your Acts

      My Sunday Washington Post Business Section column is out. This morning, we follow up a June column that advised taking advantage of markets at all time highs to clean up your portfolios. This time out, we look at the market turmoil as a reminder, and the snapback rally as an opportunity. The print version…Read More

Category: Apprenticed Investor, Asset Allocation, Investing, Really, really bad calls, Trading

What If They Threw a Panic and No One Came?

Source: Bianco Research     “Its enough to give a long-term investor some hope for the future of finance.”   Here’s a bit of role reversal for you: Mom and Pop were content to ride out the market’s volatility this past month, more or less sitting tight. Meanwhile, the pros were driven to the point…Read More

Category: ETFs, Investing, Psychology, Sentiment

How exposed are American households to the stock market?

This is fascinating look at how exposed the average American household is to the equity markets. On average, about 55% of adults have equity exposure, and it amounts to less than 15% of their total assets. I’d wager that is a very top heavy distribution both in percentage and asset size.   Source: The Economist…Read More

Category: Investing, Markets, Wages & Income

Data Points to Ponder During Today’s Selloff

China’s markets set the tone for the day (and perhaps the week) with an 8.5 percent blood-letting. Global stocks followed suit, which came after last week’s 5 percent tumble. Rather than tell you that markets are oversold — you already know that anyway, and oversold markets can become even more oversold — I want to bring a…Read More

Category: Investing, Markets, Sentiment

Alpha & Beta: Two Competing Investment Philosophies

The best investment strategy for you? It’s the one you’re likely to stick with. Barry Ritholtz WaPo, August 16, 2015   “Where’s the Dow going to be in a year?” That’s often asked of financial TV guests. From their responses, you’ll detect two distinct investment philosophies emerge. Which answer resonates with you most strongly probably…Read More

Category: Asset Allocation, Investing, Philosophy

What’s Your Investing Philosophy?

    My Sunday Washington Post Business Section column is out. This morning, we look at two competing investment philosophies, Alpha & Beta. The print version had the sort of misleading headline Be the guy with the calm and collected investing strategy – I much prefer the online version’s The best investment strategy for you? It’s the…Read More

Category: Analysts, Asset Allocation, Financial Press, Investing, Philosophy

Investors: Time Is Your Ally, Not Your Enemy

Today’s column is going to wax a bit philosophical. Stay with me; I think it will be worth your effort. You don’t really understand time. By “you” I mean humans in general. This has great significance for investors. They often misapprehend time, are seemingly unaware of its importance, and can’t conceptualize it over the long…Read More

Category: Investing, Psychology

Arthur Zeikel’s Investing Rules

Arthur Zeikel, president of Merrill Lynch Asset Management, sent his daughter a letter teaching her some investing basics. Enjoy! Personal portfolio management is not a competitive sport. It is, instead, an important individualized effort to achieve some predetermined financial goal by balancing one’s risk-tolerance level with the desire to enhance capital wealth. Good investment management practices…Read More

Category: Apprenticed Investor, Investing, Rules

How to sort through garbage online investment advice

    My Sunday Washington Post Business Section column is out. This morning, we look at how the internet evolved as a source of bad investment opinion. The print version had the full headline How to sort out the garbage of online investment advice; I like the online version hed, Hey, investment cranks: The Internet never forgets. Here’s an excerpt from…Read More

Category: Analysts, Financial Press, Investing, Really, really bad calls, Weblogs