Invest

Can Monkeys Pick Stocks Better than Experts?

We’ve spent plenty of time explaining why investing in passive, low-cost index funds will out-earn actively managed funds in the long-run, and that most fund managers can’t even outperform the indexes they’re trying to beat over time. The underlying theme of these posts is that stock market “experts” aren’t really experts at all. They may […]

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Weekend Linkage: Goldman Sachs, Passive Investing, and Txting $

Looking for some good summer reading? There’s not much time left before schools start up again, the beaches start to clear out, and football gets into full swing. This week, Rolling Stone has a massive story on Goldman Sachs, where it claims that the investment bank “has engineered every major market manipulation since the Great […]

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There Is No Level Playing Field

In recent weeks, the business media has been host to a rising tide of faux-outrage at perceived injustices in the financial marketplace. A lot of column-inches have been devoted to High Frequency Trading and, more recently, a tempest in a teapot has been brewing over bond-flipping by originators and institutional investors. Arguments like these are […]

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Weekend Linkage: Buy and Hold, Overdrafts and the Internet Revolution

As we get into the middle of August and closer to the end of summer, we’ll start to get back into the swing of things. And as employment numbers “get better” — meaning less people are filing for unemployment — and the stock market ticks back up, perhaps brighter days are right around the corner. […]

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Ask the Readers: How Many Bank Accounts Do You Have?

As part of the Automatic Finances system, it’s necessary to have a number of different bank/investing accounts for your money. In order to better save for goals, every account you have needs a name: from your main checking account to your short-term savings to your long-term investment and retirement accounts. Sometimes, however, it’s easy to […]

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Profit Takers, Wall Street and Your Investments

Every so often I hear a television or radio commentator talking about the day’s trading on the New York Stock Exchange. Sometimes they say, “The market was up today, but profit takers drove stocks lower late in the day.” They make profit takers sound like bad guys. Does buy-and-hold investing produce profit takers? Or is […]

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When Investing, Stick to What You Know

Warren Buffett can always be counted on for great sound bytes that offer sensible advice for every investor. While not as pithy as some of his other statements, his advice that you shouldn’t invest in any business that you don’t understand is so obvious that it’s easy to lose sight of its wisdom. Buffett is […]

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Are Your Actively Managed Funds Beating the Index?

We’re constantly discussing ETFs/index funds and actively managed mutual funds even though the comparison is so unflattering to actively managed funds. But don’t take it just from me. You need to do your own research on the performance comparisons. By and large, what you’re going to find is that very, very few active funds consistently […]

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Ask the Readers: Do You Invest in Active or Passive Funds?

We’ve been focusing a lot recently on investing, with the basics of assets like ETFs, trading vs. investing and even hedge funds. With the stock market essentially on sale right now, it’s a great time to be investing — but it obviously matters what you’re buying. I’m a big fan of index funds, especially since […]

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The Pros and Cons of Exchange-Traded Funds (ETFs)

Exchange-Traded Funds (ETFs) are, as their name implies, funds that trade on an exchange. Traditionally, ETFs have been baskets of stocks that track broad indices. More recently, ETFs have launched that track exotic strategies or asset classes with the goal of allowing retail investors to participate in institutional strategies. Why ETFs? The ETF structure is […]

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Is it Time to Regulate Hedge Funds?

Banks are essential (but troublesome) institutions that keep checking accounts for depositors, but only hold a fraction of deposit liabilities in reserve to pay for checks. Normally, 15 cents on the dollar is adequate reserves for banks because those writing checks will about equal to those making deposits. To ensure banks have enough reserves to […]

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Keeping “The Market” In Perspective

I have to admit to an interest in the equities market that borders on the unhealthy. I’m well aware that, over the long term, saving and buy-and-hold investing are the keys to growing personal wealth. But still, like a siren call, the excitement and adventure of short-term trading is a seductive distraction. Like any vice, […]

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Investing vs. Trading: Which Are You Doing?

“Investing” is one of the most misused words in our language, especially when talking about finances. Oftentimes, people use the word “investment” in a non-financial sense when purchasing something whose value is liable to depreciate, such as “I finally invested in a new laptop.” But when it comes to the stock market, there’s a difference […]

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