What is Investment Banking?

A few days ago I ran across the best definition of investment banking that I have encountered to date.

When I was fresh in the industry it was somewhat of a clouded subject for me. People would talk about “investment banking,” but what, exactly, was that? I was working for a brokerage firm at the time. Was I in investment banking, I wondered? And if not, what did investment banks do that my firm didn’t do?

The term investment ...

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Honest Crap is Better than Fools Gold

Investment advisors and stock brokers see a lot of crap.

Good advisors know crap when they see it. Bad advisors don’t recognize crap for what it is.  The really bad advisors take the crap and sell it to their own clients for fat commissions.

Advisors and brokers are constantly bombarded with products and services in the hopes they will turn around and sell these products to their own clients.

Today I got one such e-mail. It was a company called  More →


Has the Stock Market Ever NOT Been Rigged?

Is the stock market rigged? This could have been the headline for the last 400 years – possibly longer – depending on when you claim the stock market “started.”

It seems like every week the media “uncovers” that the market is rigged. Some of the coverage is thoughtful, and some is not.

Today the focus is on high frequency trading. ...

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Do Investments Have Fashion Appeal?

Unfortunately, this is the way too many investments are sold.

Investment banks are always trying to figure out what will be most appealing to their customers. In most businesses, this can and should be business as usual. But with investments, it has to be different. Why? Today’s fashionable investments may not be what is likely to provide the best risk-return trade off in the future.

It is the investment advisor’s job to help clients sift through what may seem ...

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You Can’t Predict…..

the weather, so how would you ever hope to predict the stock market.

Reports are now coming out that the extreme cold weather in most of the nation this winter had a noticeable impact on the economy.

I am amazed at all of the things we naturally accept are unpredictable (weather, lifespans, wars, elections, etc.)……but then assume the stock market, which is affected by these events, should be ...

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Empowered to fail by Chuck

My wife recently commented to me about the Charles Schwab ad campaign. You know, those ads with the “Talk to Chuck” slogan. They encourage you to “take control of your destiny,” and “make your own decisions.”

They are well done. They leave you with a feeling of inspired empowerment. The feeling is a fallacy, but the ads generate it nonetheless – so hat is off to whatever advertisement firm came up with those.

Throwing darts at stocks in a ...

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Gone Fishin Portfolio – Doing it Live

Live investing is completely different from casual investment theorizing.

Yesterday I noted that the “Gone Fishin’ Portfolio” underperformed the S&P 500 by 21.48% in 2013.

What about longer term numbers?

Here are the 3 year returns:

Gone Fishin’ Portfolio     6.88%

S&P 500                             16.18%

Difference                        -9.30% per year

And 5 year returns:

Gone ...

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When a Market Commentator knows NOTHING

Here is Bob Doll, who apparently knows NOTHING about how investment markets operate.

Click here to watch the video

This is disturbing stuff. He points out that active managers, collectively, have historically done a bad job of beating the market indexes…..but he thinks this will change in 2014.

He doesn’t realize that it is simply a mathematical inevitability that they lose to the indexes. These managers all buy and sell from ...

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