Proper financial planning that provides for our financial needs in retirement is perhaps the prototypical example of willful blindness. We all know that most people have not saved enough to provide for a sustainable long-term income in retirement. The core issue here is that we (as a society and as individuals) are making consistently bad [...]
Archive for the ‘Behavioral Finance’ Category
Are We Hard-Wired To Make Bad Financial Choices?
Posted in 401(k), Active Investing, Behavioral Finance, financial planning, Investors, Long-term investing, Low Cost Investing, Market Outlook, Markets, Passive Investing, Regular Investing, Retirement, retirement income, retirement planning, Wealth, tagged college debt, college education, housing bubble, mortgage, mortgages debt, Real Estate, saving for college on May 18, 2012 | 1 Comment »
The Most Common Mistake Investors Make
Posted in Active Investing, Asset Allocation, Behavioral Finance, Bonds, Diversification, ETFs, Financial Advisors, financial planning, Investors, Long-term investing, Low Cost Investing, Market Outlook, Market Timing, Media and the markets, Mutual Funds, Personalization, Retirement, retirement planning, Stock Investing, Uncategorized on May 11, 2012 | 5 Comments »
Each year, the research firm DALBAR publishes their Quantitative Analysis of Investor Behavior. Every year, the results show that individual investors are their own worst enemies. And this year is no exception. The QAIB examines the real returns earned by investors in equity mutual funds, bond mutual funds, and asset allocation mutual funds. Over the [...]
The Hidden Risk in Target Date Funds
Posted in Asset Allocation, Behavioral Finance, financial planning, Long-term investing, Low Cost Investing, Market Outlook, Mutual Funds, Retirement, retirement income, retirement planning, Risk, Uncategorized, Wealth, tagged 2009 market crash, 2010 target date folios, diversification, investing for retirement, mutual funds, retirement, retirement planning, Risk, Target Date Folios, Target Date Funds, volatility on May 8, 2012 | 2 Comments »
Lately, Target Date Funds (TDFs) have been the subject of intense scrutiny and criticism, because investors have realized (in many cases, after the fact) that these types of funds can be very volatile. In the aftermath of the 2008 collapse of the financial markets, TDFs for investors near retirement (funds with a projected retirement data [...]
Stocks and Shocks: What to Do?
Posted in Behavioral Finance, Bonds, book review, Commodities, Corporate Governance, debt, Diversification, financial planning, Global Investing, Leverage, Long-term investing, Market Outlook, Market Timing, pension plans, pensions, Personalization, retirement planning, Risk, Stock Investing, Uncategorized, Volatility, Wealth, tagged China, energy, energy policy, Euro, Europe, european debt, FDIC, France, Iran, Italy, Obama, oil, Persian Gulf, Spain on May 2, 2012 | Leave a Comment »
Guest Post by Contributing Editor, David Kotok, Chairman and Chief Investment Officer, Cumberland Advisors. How do we avoid walking into a “left hook” in the markets? That was the discussion this week during a client review. “Can’t you see them coming and avoid them?” he asked. Well maybe some folks can, but the issue of [...]
Why Mutual Fund Managers May Not Act in Your Best Interest
Posted in Active Investing, Behavioral Finance, Diversification, Financial Advisors, financial planning, Market Timing, Markets, Mutual Funds, Retirement, Stock Investing, Uncategorized, tagged herding mentality, Index Funds, Jeremy Grantham, mutual fund managers on April 27, 2012 | 1 Comment »
Jeremy Grantham has produced yet another truly outstanding essay in GMO’s Quarterly Letter to Investors for April 2012. Never reluctant to take on controversy, he focuses on the ways in which mutual fund managers have strong incentives to behave in ways that are often not in the best interests of investors in their funds. In [...]
From the Portfolioist Book Shelf: Risk Less and Prosper by Zvi Bodie and Rachelle Taqqu
Posted in Asset Allocation, Behavioral Finance, book review, Books, Diversification, financial planning, Long-term investing, Low Cost Investing, Rebalancing, Regular Investing, Retirement, retirement income, retirement planning, Stock Investing, Uncategorized, Volatility, tagged bonds, Risk Less and Prosper, TIPS, Worry Free Investing, ZVI Bodie on January 26, 2012 | 1 Comment »
The recently-published book by Zvi Bodie and Rachelle Taqqu, Risk Less and Prosper: Your Guide to Safer Investing, provides a unique perspective on how to meet the challenge of long-term financial planning. The book is well-organized into a number of steps required for identifying and organizing long-term goals and thinking through how to meet these [...]
Is Your Brain a Barrier to Smart Investing?
Posted in 401(k), Active Investing, Asset Allocation, Behavioral Finance, Books, Diversification, ETFs, Financial Advisors, financial planning, Income Investing, Investors, Long-term investing, Markets, Mutual Funds, Personalization, retirement income, Risk, Uncategorized, tagged asset allocation, Behavioral Finance, Daniel Kahneman, David Swensen, Fees, investing, management fees, mutual funds, rebalancing, retirement planning, volatility on January 5, 2012 | 1 Comment »
Guest blog by Daniel Solin, Mint.com. The evidence showing that most individual investors significantly underperform the market is compelling. A study done by Dalbar, a leading financial services market research firm, found that, during the 20 years from 1991 through 2010, the average stock fund investor earned returns of only 3.83% per year, while the [...]
Lemons or Lemonade?
Posted in Behavioral Finance, Diversification, financial planning, Income Investing, Investors, Market Outlook, Personalization, Portfolio Investing 101, Uncategorized, Wealth, tagged Accrual Anomaly, cash flow, Dr. Richard Sloan, earnings, Len Zacks, The Handbook of Equity Market Anomalies, zacks, zacks.com on November 23, 2011 | Leave a Comment »
Guest Blog by Kip Robbins, CFA, Zacks.com. This past Sunday it was 71 degrees and dry in Chicago. If you’ve ever lived here in November, you know that’s an anomaly. At this time of year, it’s usually 44 and wet. I felt so warm, I decided to have a glass of lemonade which is usually [...]
From the Portfolioist Book Shelf: Freefall by Joseph Stiglitz
Posted in Active Investing, Asset Allocation, Behavioral Finance, book review, Books, Corporate Governance, Uncategorized, tagged bank failure, banks, economist, financial crisis. mortgages, Free Markets and the Sinking of the World Economy, Freefall: America, Joseph Stiglitz, Nobel Prize, World Bank on October 28, 2011 | 5 Comments »
Joseph Stiglitz received the 2001 Nobel Prize in Economics and shared the 2007 Nobel Peace Prize for his work with the Intergovernmental Panel on climate Change (IPCC). He is a professor of Economics at Columbia University and was Chief Economist of the World Bank from 1997-2000. Freefall: America, Free Markets, and the Sinking of the [...]
Why You Don’t Have to Occupy Wall Street
Posted in Active Investing, Behavioral Finance, Diversification, financial planning, Investors, Long-term investing, Market Outlook, Markets, Rebalancing, Retirement, Stock Investing, Uncategorized, Wealth, tagged 401k, MyPlanIQ, Occupy Wall Street, Occupy Wall Street movement, retirement, retirement savings on October 26, 2011 | 1 Comment »
MyPlanIQ recently ran an interesting article in their weekly newsletter regarding the Occupy Wall Street movement and the overwhelming wealth disparity in the world. What we liked about this article was the actionable advice towards the end that 401(k) plan participants can take to retain control over building their own wealth—without having to march on [...]
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