It’s hard to believe that exactly 80 years ago — nearly a century — our country was in the depths of the Great Depression. Although our world today is completely different in countless aspects, you can still get a lot of insight from finance and economics writings from that era. This is especially true for the years 1932 to 1934.
Risk, Uncertainty and Profit by Frank H. Knight was first published in 1921 and reprinted several times; each ...
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When brokers talk to clients or prospective clients, they are supposed to keep some sort of notes to the conversation. This is especially important for compliance purposes. It is necessary to have something that shows you “know the customer” to make sure you are making reasonable recommendations for them. Sometimes the content of these notes can be telling.
I started my career in 2002, just as the tech market was bottoming off the crash that started in 2000. ...
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Early in my career I had a job at what would be considered an “old school” brokerage. Business was done almost exclusively on the phone. We sold stocks on commission. Every once in a while there would be a wise crack from a broker in the room trying to sell a client.
Client: “I’ll pass on this one.”
Broker: “The only people that ever made money passing were quarterbacks and racecar drivers. Let’s pick up 100 shares.”
I didn’t spend much time ...
More →Beating the market is hard to do. And it is not just hard – like running a marathon is hard. Trying to beat the market is laden with peril because you have to risk money. So when I say beating the market is hard, I mean it in the sense of “walking a tight rope without a safety net” rather than “running a marathon.”
A mathematical impossibility
The first step in understanding how investments work is to accept that ...
More →I generally advise families to avoid using margin for investment purposes. This applies to the accounts I manage and to the investment vehicles I recommend in those accounts (mutual funds, ETFs, etc). There are several reasons why.
The “L” word
First and most obvious, with the leverage that margin enables, there is a greatly increased chance that an investor will be totally wiped out by a market downturn. When a family is investing for generations, there will be many ...
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