“Investing” Article Archive

There are two primary schools of thought regarding security analysis - fundamental and technical analysis. Fundamental analysis utilizes a much wider range of information than does technical analysis and relies on traditional financial statement analysis. Technical analysis, on the other hand, concerns itself with attempting to identify patterns in past price movements. Both consider macro economic trends to differing degrees, but emphasize the use of firm specific microeconomic data. Read the rest of this entry »

The Efficient Market Hypothesis, which had its beginnings in the 1960s from Eugene Fama's Ph.D. dissertation, states that at any given time all information about a security has been accounted for in the current price of that security. The logical result of this hypothesis is that securities analysts are unable consistently to pick stocks that produce a return in excess of what is returned by the overall market basket of stocks. Read the rest of this entry »

Way back in the summer of 2003, Chris Sells wrote The "Average Return" Myth. His commentary can be quite an eye-opener for some people. I know this concept he discussed surprised me when I first encountered it many years before I came across his post. I'm reproducing a big chunk of his explanation here. Read the rest of this entry »

The question of whether it makes more sense to buy a home or rent from someone else is off topic for a blog about exchange traded funds (ETFs). But buying real estate is often cited as the single most important investment that most people make and the more general theme of this site is about investing. So here goes. Read the rest of this entry »

Investors, like others looking to learn something, turn to books to get insights from the successful professionals in the industry. The problem with investment books is that they fall short of actually being able to teach someone to be a good enough investor to consistently beat the market. Read the rest of this entry »

Although I believe it's important to be heavily invested in the stock market, I also believe it is important to keep some cash handy. I divide my cash holdings in to two piles. The first pile, which is the smaller of the two, is what I think I'll need day-to-day to cover things like credit card bills, rent, etc. This cash sits in a regular checking account. A checking account is key because it provides near instant access to my cash. However, the drawback with most checking accounts is that they don't pay much interest. In fact most checking accounts don't even keep up with inflation so you're actually losing money. As a result, it's best to keep the amount in checking accounts as small as possible. Read the rest of this entry »

My preferred investing style leans towards the buy-and-hold style. On the other end of this spectrum are active investors. The goal of the active investor is to pick winners by timing their purchases and sales. The flaw with the methods employed by active investors is that markets are moved by news. And this news is rarely predictable and quite random. As a result, the movements of stocks are also equally unpredictable and random. Read the rest of this entry »

I came across this image that struck me as being wonderful metaphor for the current housing market.

Here's what this image says to me:

• There are so many homes available for sale that even a slow moving snail could come across one.
• Some home owners have been forced to walk away (I see this in the empty shell).
• People that didn't jump into the housing frenzy (i.e. moved along slowly like a snail) are now being rewarded.
• If you've got the resources, now may be a good time to upsize (the empty shell is bigger).
• Even if you've moved like a snail up until now, consider investing in real estate. The deals will probably never be better.

Yeah, yeah I know. It's just supposed to be a funny picture, but hey I can't keep my brain from coming up with these thoughts :-)

Note: This photo came from one of Flickr's talented artists ukaaa.

I have always questioned the motivations of investment advisors. I've also often questioned the value that real estate brokers bring and whether that value justifies their commission. I guess I'm suspicious by nature, but being so seems to have served me well so far. And so it was with great interest that I read this month's Conde Nast Portfolio magazine and came across the story of an investment advisor, Blaine Lourd, that let the cat out of the bag. Here are some of the more telling quotes from the article. Read the rest of this entry »

A man is getting into the shower just as his wife is finishing up her shower, when the doorbell rings.

The wife quickly wraps herself in a towel and runs downstairs. When she opens the door, there stands Bob, the next-door neighbor. Before she says a word, Bob says, "I'll give you $800 to drop that towel." Read the rest of this entry »

I've blatantly stolen this from Andy Kessler's Running Money. There's some truth wrapped within the humor. Read the rest of this entry »

I'm reading Running Money by Andy Kessler. It's a book about the hedge fund industry and how Andy navigated the waters of this chaotic world. I'm only 50 pages in to it, but I've already come across what I think will be my favorite page. Read the rest of this entry »

It'd be an exaggeration to say that I'm a fan of Jim Cramer. I do enjoy his show though while at the gym as it makes the 30 minutes on the stationary bicycle go by quicker. I've always considered the show to be entertainment though. Sure there's investment advice, but it's always seemed useless to me what with each episode including a hundred buy and sell recommendations. Read the rest of this entry »

CBS Marketwatch published a horrible article today on using leveraged ETFs to beat the S&P 500. In the article, author Bill Donahue discusses a couple of ideas that he thinks are slam-dunks and no more risky than just investing in the index. This sort of reporting not only annoys me, but I find it to be irresponsible. Read the rest of this entry »

This is the first edition of the Exchange Traded Funds (ETFs) Carnival. Read the rest of this entry »

Whether you're investing in individual stocks or baskets of them via mutual funds and exchange traded funds (ETFs), it's important to understand the terminology used in the investing world. This knowledge can help you decipher the jargon you're likely to encounter from investment-related news in newspapers, blogs, and on TV. Read the rest of this entry »