By 2 Cents on October 28th, 2011 | Category: Investing |  Eat, drink and be scary.
~Author Unknown
I’ve got a little Halloween-themed Friday Food for Thought for you here today. I came across this article On Market Timing and Whiskey on Twitter via Rob Bennett. Basically, the author takes a 1952 quote about the pros and cons of whiskey and superimposes on it his own take on market timing.
As with any debate, defining the terms is key. Market timing, in some circles, has come to take on a foreboding tone. It is seen as an investment vice, garnering a level of disdain similar to that of whiskey during the days of prohibition. For some, it’s the strategy that shall not be named – the Voldemort of the investment world if you will. As we prepare to celebrate All Hallows’ Eve, I thought it might be interesting to look at whether market timing is [...]
Read on and enjoy … On the Evils of Market Timing
By 2 Cents on August 4th, 2011 | Category: Investing |  I know what I have given you. I do not know what you have received.
~Antonio Porchia, Voces, 1943, translated from Spanish by W.S. Merwin
Well, it took about two weeks, but the Couch Potato cabal piled on all at once in response to my post on Why This Is No Market for Couch Potatoes. Unfortunately, they did so on the day I was out of town with my son for his follow-up surgery so I wasn’t (and to some extent still am not) in the best condition to comment. I’m still busy with post-op pain management and preparing to move, so I’ll have to make this quick, and therefore less thorough than I’d like.
While some fine points were made, I was fascinated by the number of people who commented and attributed a point of view to me that I didn’t think I had put [...]
Read on and enjoy … Couch Potato Rebuttals
By 2 Cents on July 18th, 2011 | Category: Investing |  Never accept the proposition that just because a solution satisfies a problem, that it must be the only solution.
~Raymond E. Feist
Update: This article was featured in the Totally Money Carnival at Family Money Values. Thanks!
A recent article in Money Sense magazine offered some data on investment returns for the publication’s preferred investment indexing method: the Global Couch Potato portfolio. It’s a simple, low-cost way to invest in a set allocation of stocks and bonds with limited effort on the part of investors. The rise of ETFs over the past decade has turned this strategy from a questionable alternative to mutual funds to a near standard in the DIY investment space. Many personal finance and investing sites promote it as the best way for individual investors to manage their portfolios.
The strategy grew out of a desire to circumvent the [...]
Read on and enjoy … Why This Is No Market for Couch Potatoes
By 2 Cents on February 25th, 2011 | Category: Retirement |  [Ed Easterling of Crestmont Research] favors us with yet another book, called Probable Outcomes: Secular Stock Market Insights, in which he takes on the mostly silly research, done by so many analysts, that purports to show what an investor can expect to make from his retirement portfolio over time. I can’t tell you how disastrous this simplistic analysis can be for retirees.
~ John Mauldin
Update: This article was included in the Wealth Builder Carnival #30 at Wealth Builder as well as the Carnival of Financial Planning #174 hosted by The Financial Blogger. Thanks!
I’ve got some Friday Food for Thought for you this week that fits in nicely with our recent discussion on passive investing and the dangers of investment dogma. It comes to us courtesy of John Mauldin’s most recent installment of Outside [...]
Read on and enjoy … Safe Retirement Withdrawal Rates and Probable Outcomes
By 2 Cents on February 23rd, 2011 | Category: Investing |  To be interested in the changing seasons is a happier state of mind than to be hopelessly in love with spring.
~George Santayana
I’ve been thinking a lot more seriously about my investment approach lately since we’ll soon be at a point where we feel more comfortable about participating in the markets again. This is based purely on the stabilization of our personal financial situation and does not by any means represent a bullish call on the stock market. I still have serious concerns about the structural problems in the markets and the economy, and the 100% run since the March 2009 lows doesn’t make me all that sanguine about putting money to work here and now.
With those caveats in mind, I do anticipate some form of re-entry to the equity world over the next 12 months or so. I wrote about how this eventuality led [...]
Read on and enjoy … Passive Investing: Mixed Feelings
By 2 Cents on June 4th, 2010 | Category: Investing | Genuine ignorance is . . . profitable because it is likely to be accompanied by humility, curiosity and open-mindedness; whereas the ability to repeat catch-phrases, cant terms, familiar propositions, gives the conceit of learning and coats the mind with varnish waterproof to new ideas.
~ John Dewey
Update: This article was included in the Carnival of Financial Planning #145 posted at The Skilled Investor. Thanks!
Today’s Friday Food for Thought is a little different from past editions. Most of the articles I’ve highlighted so far have been those that I’ve found inspiring or otherwise agreed with. Today I’m writing about an article where I found myself completely disagreeing with almost every line.
I chose to highlight this article, not to criticize the author or those who would agree with him, but just to show that there’s another side to every opinion. [...]
Read on and enjoy … Ignorance Makes You a Better Investor & Other Money-Losing Fallacies
By 2 Cents on May 27th, 2010 | Category: Investing | When you have to make a choice and don’t make it, that is in itself a choice.
~ William James
Update: This post was selected for the June 1st, 2010 edition of the Best of Money Carnival posted at Free Money Finance. Thanks very much! It was also featured in the Carnival of Financial Planning - Edition#144 posted at Free Money Finance. Thank you!
A lot of smart people advocate passive investing. Passive investors do not try to time the markets. They are usually buy and hold investors who set an asset allocation and rebalance periodically. They have a core belief that their investments will be profitable in the long term, which usually means 20 years or greater.
Many passive investors are adherents to the principles of Modern Portfolio Theory, and by association, the Efficient Market [...]
Read on and enjoy … Passive Investing and the Ostrich Effect
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