“The VIX is too low, valuations are too high, the recovery is too old and the Fed is tightening. For an old market dude like me, that is a scary list.” – Jim Paulsen, Leuthold Group market strategist, quoted in the The New York Times on 11/5/17. Read more
If past were prologue
“...every study of prior market years that acted like 2017 leaves the benefit of the doubt with the bulls. Whenever the S&P 500 has made a record high in September, or posted seven straight months of gains, or been up at least 15 percent through October (all applicable now) the ensuing months of the year have a better-than-average tendency to rise more than the norm.” – CBNC senior markets commentator Michael Santoli, writing on 11/19/17 that history is on the side of a strong finish in the markets. Read more
What’s your benchmark?
“Using a desired return, such as the S&P 500, as your compass for success will likely steer you into troubled waters. Most investors have portfolios more balanced between stocks and bonds, so a performance comparison with an all-stock index is bound to disappoint.” – Donald Bennyhoff, Vanguard senior investment analyst. Instead of using a desired return, he recommends benchmarking against your required return, which should come from a personal investment plan. Read more
The importance of being humble
“...almost every epic investment blunder in history was the direct result of overconfidence. Long Term Capital Management were confident that bond spreads couldn’t widen beyond a certain point for a prolonged period of time. Investors during the Dot Com Bubble thought that the internet was the future of the economy. When the treasurer of Orange County’s investment fund was asked how he knew interest rates wouldn’t rise, he replied: ‘I am one of the largest investors in America. I know these things.’ His fund filed for bankruptcy within a year.” – Of Dollars and Data blogger Nick Maggiuli writing about the dangers of the Dunning-Kruger effect, a cognitive bias in which people with low ability think of themselves as having high ability. Read more
With investing, the race is to those who start early
“It is tempting to look at an outlier — a company, a brand, a net worth — and study the most recent things that added to its success.... So we write 2,000 books on how Buffett sizes up management teams when the biggest and most practical takeaway from his success is, ‘Start investing when you’re in third grade.’” — Morgan Housel, writer at The Collaborative Fund, explaining that a key reason why Warren Buffett was able to build so much wealth was that he started investing so much earlier than most people. Read more
‘Tis the season to shop... your Medicare plan
“Retirees on Medicare view healthcare as their most burdensome expense. But they are less likely to comparison shop for Medicare plans than for their groceries and gas, even though plan shopping would probably save more money.” – Kim Blanton, author of the Squared Away blog, writing on 11/21/17 about the importance of reviewing your Medicare coverage during open enrollment, which is taking place now until December 7. Read more
Matt Bell is Sound Mind Investing's Managing Editor. He is the author of five biblical money management books and the teacher or co-teacher on three video-based small group resources. His latest book, Trusted: Preparing Your Kids for a Lifetime of God-Honoring Money Management, will be published by Focus on the Family and its publishing partner, Tyndale House, in April of 2023. Matt has spoken at churches, universities, and conferences throughout the country and has been quoted in USA TODAY, U.S. News & World Report, and many other media outlets.
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