Beware Prevailing Investor Sentiment and Consensus The CNN Business website offers a “Fear and Greed Index,” which tracks the prevailing emotions in the market. At present, the market sentiment falls within the “Greed zone.” However, if we zoom out and assess how this sentiment has fluctuated over the past 12 months, it becomes clear that…
How the “Flaw of Averages” Distorts Investor Decision-Making When Planning for Future Goals Consider the case of the statistician who drowns while wading through a river that he calculated to be, on average, three feet deep. If he were alive to tell the tale, he would warn that plans based on assumptions about average conditions…
Reasonable Expectations for Equity Investing Hendrik Bessembinder, a professor at Arizona State University and the author of the groundbreaking paper “Do Stocks Outperform Treasury Bills?” provides key insights into the realities of stock market investing and lifetime wealth creation through the markets. Bessembinder evaluated the lifetime returns of every U.S. common stock traded on the…
Retirement Planning: Beyond Numbers, Embracing Life’s Choices We view retirement planning through a financial lens trying to calculate that “magic number” that will sustain a comfortable lifestyle. Our minds gravitate towards numbers and financial preparedness. We focus on savings targets, investment returns, and withdrawal rates, calculating how much we need to retire comfortably. In this…
Beware the Headlines In a recent article, Dimensional Fund Advisors highlighted a couple of common investing mistakes. One of these is falling in love with popular stocks based on their recent performance or media attention. Their research, however, shows that it is better to buy the Top 10 companies in the US before they reach…
The Economics of Time and Money: Understanding the Value Exchange Think of all the things that you spend your money on – objects and experiences. Do you ever stop to consider if it is worth it? Sometimes it is and sometimes it’s not. If you are not limited by money, you will be limited by…
For Financial Health, Consider an Information Diet In today’s digital age, investors are drowning in unproductive information. Market commentary and news flow often thrive at the extremes, drawing the attention of investors during periods of market exuberance or decline. When investors zoom in on this noise flow, they tend to make less rational and unprofitable…
If You Want a Good Life Then Improve Your Healthspan There is a direct correlation between your health and your quality of life. As your health suffers in later years your quality of life diminishes. It is not how many years you have lived but rather how many of them were good. Poor health significantly…
Rising Geopolitical Risks and Overcoming the “Focusing Illusion” The escalating geopolitical tensions significantly influences our perceptions, often leading us to draw connections between complex global events and anticipated financial market shifts. In the process, we tend to lose sight of our long-term objectives, treating current events as pivotal moments without fully acknowledging their historical insignificance…
Money Troubles vs Money Worries If you want more control over your finances, you might be surprised to find that focussing your attention on your money worries can actually lead to more negativity, which often results in feeling even less in control. The first step is to distinguish between money troubles and money worries. Financial…