Investor’s Library

Our archive of articles, essays and white papers on a variety of financial and investment topics. Searchable by subject and keywords – these are the core ideas that guide our thinking.

Winning the Loser’s Game

As in the game of amateur tennis, the key to winning the investment game avoiding mistakes. It takes patience to wait for the “other guy” to make mistakes. A powerful lesson for both pros and self-directed investors.

The Real Truth Involves More than Facts

A wise investor not only asks questions, but also asks the broker or salesman whether there is anything the investor should have asked about, but didn’t. With parallels to Bill Clinton’s run-in with Kenneth Starr…

Diversification

Do you own several stock mutual funds in your portfolio? In a number of different styles? Think you are diversified? Think again. Diversification has a dimension that most investors – even the pros – forget all about. You need to develop more than one point of view about the world.

Stretch Your IRA

Don’t listen to sales pitches about buying a “stretch IRA.” You can stretch your existing IRA through some simple paperwork. The IRA can then outlive you by a generation, benefitting your children or grandchildren.

Growth vs. Value.

Growth stocks are best! No – Value stocks rule! Is there really a difference? Do you buy white meat chicken for some dinner guests and dark meat for others? Or – is it best to just cook a whole chicken? My take on the growth v. value debate.

The Most Important Question in Investing

If I am only allowed to ask an investor one question before suggesting a strategy, this is the one. All other questions follow and are related to this one – yet individual investors almost never ask it of themselves.

Risk or Pain?

The next time some broker asks about your “risk tolerance,” tune him out and assume he said, “pain tolerance.” Your portfolio is about to be constructed so that you experience the maximum amount of pain you can tolerate. I have a simple answer to the “pain tolerance” question – I don’t like pain, and I’d rather not experience any if I don’t have to.
 

The Social Security Reform Debate

The sound-bite policy makers are at it again. Boil a complex issue down to a simple slogan and assume the problem is fixed. Here is what is gravely wrong with proposals to “privatize” social security.

Variance is a Drag

Risk is like a bed of nails: With a fat mattress of high returns on top, we can ignore it. When returns shrink back down like a thin camping mat, those very same risks can suddenly keep us awake at night. Here’s how the math is working against you.

Stock Market Expectations

Investors and advisors are prone to looking only at the recent historic record when forming expectations for stocks. Here is how it really works. Brokers and investors who cannot accept this math should be forced to walk around town with a sign around their necks that says, “I can’t add.”

Dollar Cost Averaging

The investment approach of “dollar cost averaging” is, at its core, a form of market timing. Yet, it is commonly practiced by those who think market timing doesn’t work. Our thoughts on this conundrum…

The Value of Information

When a fast-growing company’s stock does no better than a slow-growing company’s stock. A brief explanation of why that can be true.