Should I stay or should I go?

  • “It ‘feels’ like there is a rug-pull moment coming any day now.” — Michael Batnick, author of the Irrelevant Investor blog, on 5/17/17. For many investors, he said, every time the market falls a little, it feels like it might fall a lot. But that feeling isn’t unique to today’s environment, he added, it’s true much of the time. Read more
  • “…the difficulty with market timing is that you have to be right not once, but twice, and you have to be right by enough to overcome the transaction costs including taxes and the value of your time. It is so hard to do that consistently over the long run that it isn’t worth trying. As a general rule, all that ‘going to cash’ is going to do is decrease your returns.” — Jim Dahle, author of The White Coat Investor blog, writing on 5/15/17 that investors should avoid allowing fear to push them to the sidelines. He said the idea of “taking money off the table” applies to gamblers, not investors. Read more
  • “…trying to judge whether a market is overvalued is a fool’s errand. Pricey stocks can and do get pricier, often for years. If your strategy is to wait for prices to decline to where you think they should be before buying, the market might very well outlast your patience.” — Barry Ritholtz, Founder of Ritholtz Wealth Management, writing on Bloomberg View on 5/1/17 about the difficulty of determining whether stocks are overpriced. Read more
  • “Predictions create reason for more trading activity. More trading activity typically leads to more errors… you’re better off planning on downturns regularly occurring than trying to predict when stocks will take a tumble.” — Peter Lazaroff, writing on his blog by the same name on 5/15/17 that stock market downturns have been common historically and are not to be feared. Understanding the market’s historical volatility can help investors control their emotions. Read more

Living in the tension

  • “Bottom line: everyone believes the same thing (equities will work), and the crowd will be right (albeit with subdued returns) until [the crowd] is very, very wrong.” — Nicholas Colas, Chief Market Strategist at ConvergEx, quoted on ZeroHedge on 5/17/17, arguing that earnings and interest rates still make stocks worth owning at today’s valuations, but those valuations suggest long-term returns will be below average. Read more
  • “When the economy is doing terribly, it’s typically a great time to invest, but no one wants to put money to work at that point because things could always get worse. And when things are going swimmingly with the economy it’s typically a time to temper your expectations, but no one wants to do that because things could always get better.” — Investment blogger/author Ben Carlson, writing on 5/12/17 about the emotional roller coaster investors ride. Read more

What will happen when the market turns?

  • “Vanguard loses 10-15% of its [assets under management], an enormous outflow in a very compressed period of time as newly-minted passives realize they’re not quite cut out to be passive after all. The pain will prove too much for many recent indexing dilettantes who thought this was easy.” — Josh Brown, writing on The Reformed Broker blog on 5/9/17 about how the next bear market may tilt the balance between active/passive investing. Read more

Deciphering signal from noise

  • “While Big Data has grown, Big Anecdotes has exploded....[W]e have more statistics than ever to help us make smart decisions, but it’s also easier than ever to let stories pull us toward bad decisions.” — Morgan Housel, writing on the Collaborative Fund blog on 5/4/17 about the persuasive nature of investing narratives. Read more