Category Archives: commentary

3 Reasons Why Those “Top 10 Investment Themes for 2014” Articles Are Terrible

top10A couple of years ago I downloaded the “research” paper that inspired this article and then forgot about it. I was reminded of it today after coming across yet another “14 Investment Ideas for 2014” type article that are all the rage every January. The paper in question was produced and promoted by a very large investment firm that “specializes in serving families with a net worth of $100 million or more.” The title was “Ten Key Investment Themes” and was written by the firm’s Chief Market Strategist. So this information must be important. Let’s look at some excerpts (click to enlarge): Continue reading

Wailing, Gnashing of Teeth, Rending of Garments, etc.

It’s been one year since Standard & Poors downgraded the credit quality of US Treasury debt. This cataclysmic event was accompanied by hysterical finger pointing, messenger shooting and mass hysteria in the media. The funny thing is the market didn’t seem to care that much. In fact, quite the opposite. Letting the news narrative dictate investment decisions is very often a shortcut to disaster.

Why Do People Crave Predictions?

Investors looking to improve their decision making skills would do well to replace one (or all) of their financial news sources with Brian Burke’s In a recent post, he writes:

“I once wrote to our own Carson Cistulli in an email that “People love lists and they love predictions. What I give them is lists of predictions.” Frankly, it wouldn’t matter how accurate the predictions are. People just crave them. The future creates anxiety, and whether accurate or not, predictions, help relieve it. At least, that’s what my astrologer tells me.”

He’s right. People crave predictions regardless of whether or not they provide any actual benefit. Burke has a simple, quantitatively driven model for predicting the outcome of football games that just happens to actually provide a benefit. Continue reading

The Big Win

One of my favorite finance guys is Ramit Sethi, writer of the “I Will Teach You To Be Rich” blog (and book by the same name). We disagree sharply on investment strategy, but I love his overall philosophy of focusing on the “Big Win.”

For example, instead of spending time writing yet another austere budget that will undoubtedly be abandoned in a few weeks, spend that limited time and willpower on Continue reading