This post is inspired by Nassim Taleb’s fantastic book, Antifragile: Things That Gain From Disorder. As someone who has spent years thinking and writing about similar ideas on a much more primitive level, it is both humbling and exhilarating to read a book that so brilliantly describes concepts of vulnerability and risk and resilience.
People make a lot of sacrifices to save for retirement. Money that could be spent on jet skis and exotic vacations is instead salted away so it can be used decades later. We do this because we don’t want to be fragile. We don’t want to be beholden to the whims of a third party, so we build up this pot of money to create independence. Unfortunately, this money often ends up invested in a way that creates an entirely different, yet equally dangerous type of fragility. Continue reading
As of this writing (3/28/13), we’re all celebrating an impressively strong first quarter in domestic stocks. The current rally began in the middle of last November, so we’re coming up on six pretty good months for the market. A few more quarters like this and we’ll start to see stories in the news about plumbers and lawyers quitting their jobs to become daytraders. Good markets can test your resolve just as much as bad markets. Continue reading
The Daily Barometer (Oregon State University student newspaper) recently ran a story about a student club that aims to deliver real world experience in the area of portfolio management and stock analysis. The OSU Foundation lets the club manage ~$1.4MM of real money, so it’s more than just a theoretical exercise. It sounds like a pretty good program and the members appear to be earnest and passionate about participating. One part of the article in particular caught my eye: Continue reading
Questions about how the election will influence markets are probably the most common inquiries advisors have been fielding over the last couple of months. It’s the same for every big election. The answer is pretty easy. Continue reading
Pain is a great teacher. The threat of pain is a great motivator. Behavior in every aspect of human endeavor has been shaped by a desire to avoid pain: legal compliance, romantic relationships, political compromise, etc. It’s a basic, fundamental element of being human. Unfortunately it sometimes backfires.
Let’s examine a few painful motivators for investors and how they are typically mismanaged: Continue reading