Tag Archives: theory

Want a Free Lunch? They Don’t Exist!

Posted on by

Investors always want a free lunch. Many chase hot performance and engage in endless debates about the next big thing they just have to try.  In order to get their free lunch, investors will take on investments with huge levels of volatility and risk. When that volatility and risk show up, they bail. Usually they will bail at the worst time and lock in huge losses. Or they bail mid-recovery and don’t get the high gains they thought. Emotionally, they get panicked. At this point I find that many will sit on the sidelines in cash and wait until “the Continue reading →

Government Economic Reports and the Market

Posted on by

Two weeks ago a jobs report came out that showed, supposedly, better than expected unemployment numbers. Somewhere around a 0.5% better number than people thought. Yet, the markets barely moved on the data. It was a total yawn-fest. Why wouldn’t good news like this cause the markets to react upward? For one, the markets price these expectations in way before they come out. The stock market is up over 16% this year, so it’s not like things are going poorly anyway. The price probably already reflected most of this knowledge. Secondly, it’s important to understand when an economics report comes Continue reading →

Investing is not a Science

Posted on by

I get bothered when people treat investing as a science. You’ve probably seen it treated this way many times to give a particular analysis more authority. Perhaps something like: “The growth going forward will be 4.23% therefore we can expect a 9.76% returns in this sector and a decline of -2.87% in this one.” Or maybe (my favorite) economic forecasts that go out 1, 5, 10 or even some I’ve seen to 30 years! Thirty years for an economic forecast!? Can you think back 30 years and realistically state you predicted everything that would have happened in the world and Continue reading →