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The Paranoid Survive, but They Burn Out. Take a Break.

Perhaps you’ve heard the expression, “Only the paranoid survive.” Ring a bell? If so, it’s probably because that’s the title of a book by Andrew S.Grove, the former chairman and chief executive of Intel. When I read this book in late 1999, I bought into the need to always be looking for opportunities and to live my life…

New Angles on the Size Premium

Many investors and advisors who implement multifactor portfolios tend to focus on capturing the value premium over the size premium, often for the simple reason that, historically, the value premium has been larger. Others have even challenged the size premium’s very existence, citing a weak and varying historical record. In both situations, it may be…

The Three Biggest Investing Anomalies

There are many anomalies in investing. It wasn’t easy to isolate the three biggest ones, but here are my choices: You love Warren Buffett, but ignore his advice. Warren Buffett has rightfully been called “the greatest investor of his generation, or ever.” Given his cult-like status, you’d think investors would hang on his every word. For many…

Grads: How to Save Pennies Now and Retire Rich

Hey, grads. It’s never too soon to start planning and saving for your retirement (even if it seems far off). Larry Swedroe gives MarketWatch’s Robert Powell his thoughts on what college students and recent graduates can do now to avoid regret later. Find it on MarketWatch.com By clicking on any of the links above, you…

Three Ways to Think About “Is It Worth It?”

In life, there are certain nonnegotiables we simply must have. Think food, water and shelter for starters. Nobody will ask, “Is it worth it to eat?” It’s just something you do to stay alive. But deciding what to eat? That’s a different question. Will I eat the bologna or prosciutto? Drink tap water or bottled?…

A Stock Tip That Went Horribly Wrong

Of all the misinformation disseminated to investors, the most pernicious supports the belief that some “investment pro” or pundit has the skill to reliably pick outperforming stocks. This myth is perpetuated by endless blogs and television appearances by “gurus” touting their latest and greatest stock selections. A steady drumbeat A quick review of what passes…

The Overconfidence Enemy in the Mirror

One of the questions I’m most often asked by reporters covering finance is: “What are the biggest risks facing investors?” My usual response is that the biggest risk confronting most investors is staring right back at them when they look in the mirror. And there’s plenty of academic research to support that view. Much of…

The Influence of Recent Market Returns on the Risk Tolerance of Individual Investors (Part 2)

Last week, we examined a study that found investors’ risk tolerance fluctuates positively with recent market returns. This behavior is in direct conflict with rational economic theory, which dictates that when market returns become negative, wealth contracts and risk aversion should therefore decrease (while risk tolerance should increase). Instead, the authors found that investment losses,…

CAPE 10 Ratio In Need Of Context

The Shiller cyclically adjusted (for inflation) price-to-earnings ratio—referred to as the CAPE 10 because it averages the last 10 years’ earnings and adjusts them for inflation—is a metric used by many to determine whether the market is undervalued, fairly valued or overvalued. Employing a 10-year average for earnings, instead of the most current 12-month earnings,…

The Paradox of Finding Motivation Through Fear

I was driving with a friend recently and telling him about some projects that really excited me. I mentioned a new book I’m working on, an article I’m writing and this new hobby of adventure motorcycling in the desert. He interrupted me and said, “How do you stay so motivated and so excited about things?”…

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