Psychology

  • How to Save for Retirement

    | May 23, 2024
    Couple laying together on boat with sunset

    As you begin to set aside money for retirement, one of the first and most critical decisions you’ll face is what type of account to put that money in. Should you contribute to your 401(k) first? Or is paying down debt a better idea? What about an IRA or a 529 plan? Should you be contributing to those as well? And what do mason jars and your mattress have to do with any of this? These are the types of questions we’ll attempt to answer as we explore the most effective way to save for retirement.

  • Why It’s So Difficult to Manage Your Own Portfolio

    | March 8, 2024
    Brain with equations and creativity

    These days, the rage is all about passive investing. That’s because over the last few decades, it’s become crystal clear that active management (aka. stock picking) doesn’t work. Even the most astute stock pickers, with millions of dollars’ worth of research at their fingertips, consistently underperform basic index funds.

  • Why You Should Look Forward to Market Declines

    | October 19, 2023
    Scared cartoon man looking down a falling stock chart

    We all have a natural inclination to want the stock market to move higher. But counterintuitively, for the vast majority of investors, lower market prices will actually lead to higher account balances down the road. There are of course some exceptions, but more than likely you’re about to find out why you’ve been spending your whole life hoping for the wrong outcome in the stock market.

  • The Cycle of Investor Emotions

    | November 3, 2022
    Smiley faces

    Evidence from numerous studies on behavioral finance suggests that the need for emotional comfort costs the average investor around 2-3% per year in foregone investment return. This shortfall, commonly referred to as the “behavior gap,” stems from the fact that optimal long-term financial decisions are often very uncomfortable to live with in the short-term.

  • The Mental Side of Investing

    | October 19, 2022
    Tree with branches in the shape of a head

    Investing is very much a mental game. It requires an intellectual toughness and fortitude that is not only uncommon, but very difficult to develop. In this article we discuss the mental resilience that investors need to cultivate in order to stomach the fluctuations that come with being a successful investor.

  • How to Predict Future Stock Market Returns

    | January 7, 2022
    Crystal ball

    Every year, top Wall Street analysts put their thinking caps on and try to forecast the upcoming year’s market return. The result of their analysis usually comes in the form of “price targets” which indicate where major indexes such as the S&P 500 are likely to be at year end. While price targets have little value themselves, what is valuable to investors is having a framework in which to view future returns.

  • The Importance of Automation

    | September 27, 2021
    Robots on an assembly line

    Keeping our long-term goals in mind at all times requires an immense amount of effort. That’s why we’re often sidetracked by short-term wants and needs. Automating certain parts of the investment process is akin to putting guardrails around your financial ability to misbehave … it’ll keep you out of trouble and ensure you stay on track for long-term success.

  • Strategies for Staying Calm During a Selloff

    | July 17, 2021
    Man meditating at sunset in front of lake

    If you’re going to sail into retirement with a nice fat portfolio and big sacks of money strewn across your deck, then you’re going to have to deal with some ups and downs along the way. Financial markets are volatile by nature, and how you respond to these critical, anxiety-inducing periods can make the difference between a meager retirement, and a life of luxury.

  • Basic Probability Theory

    | February 19, 2021
    Man thinking with dice and probabilities swirling around his head

    The unfortunate reality is that nothing in this world is certain. In fact, the only thing in life that is certain … is that nothing is certain. This is especially true when we talk about money and investing. Since we can’t deal with certainties, we’re forced to deal with probabilities. Therefore, probabilities become the lens through which we must view all things investment related.

  • Your Money is Your Second Business

    | January 3, 2018
    Man steering sailboat

    Have you ever wanted to be a business owner? Well, congrats … you already are. The minute you have even a few thousand dollars to your name, you’re officially a professional money manager running your own investment firm. Of course, you probably don’t see it that way, but that’s because you haven’t been enlightened yet. No one has ever spelled it out for you before. Well … it’s time to fix that.

  • What is Momentum and Why Does it Work?

    | December 15, 2016
    Green ball rollup uphill

    The concept of momentum originated with regard to classical mechanics, in which it refers to the tendency of a moving object to keep moving along its direction of travel. In finance, and especially with regard to investing, we talk in terms of price momentum. As you can infer, this is the tendency for asset prices to continue moving in the same direction they are currently heading.