The bull market turns 7, but no one wants to celebrate

  • “For the sake of argument, we will say the bull market is still alive.” – John Canally, Chief Economic Strategist at LPL Financial, quoted in a 3/9/16 Wall Street Journal article, exemplifying the tepid response of investment pros to the 7th anniversary of the bull market which occurred that day. Read more.

Preparing for a downturn

  • “Find a [multi-asset] manager with a good track record…who has just been in, basically four, five or six fairly simply asset classes and hasn’t had to resort to anything too esoteric [like derivatives].” – Russell Napier, a stock-market historian and author of “Anatomy of the Bear: Lessons From Wall Street’s Four Great Bottoms,” quoted in a 3/4/16 MarketWatch article. He believes the market is headed for trouble and investors will be best served by fund managers with the flexibility to move in and out of asset classes (sound familiar, DAA fans?). Read more.
     
  • “Perhaps the only thing that’s worse than not having an investment policy statement is not following the one you do have. The rules set by the statement are very important because they prevent us from making rash, emotional decisions at precisely the time when calm, collected, logical thought is most valuable.” – Carl Richards, author of the NY Times’ Sketch Guy blog, writing on 2/29/16 about the importance of having a plan for how you’ll handle financial risk, and sticking with it. Read more.

For one storied investor, nothing but good days ahead

  • “For 240 years it’s been a terrible mistake to bet against America, and now is no time to start. America’s golden goose of commerce and innovation will continue to lay more and larger eggs.” – Excerpt from Warren Buffett’s latest Berkshire Hathaway investor letter, published in the Washington Post on 2/27/16, with his long-term optimism on full display. Read more.

Strange but true

  • “It’s hard to believe that you can have 30 years of investing experience and never have lived through a sustained period of rising interest rates. It’s equally hard to believe that in a world where markets are always changing, having experience with certain events doesn’t necessarily make you a better investor.”
     
  • “It’s hard to believe that you can be wrong more than half the time and still make a fortune….Being wrong is part of the process, and doesn’t preclude strong returns. Peter Lynch said, ‘If you’re terrific in this business, you’re right six times out of 10.’” — Motley Fool columnist Morgan Housel, writing in a 2/25/16 post about many of the surprising aspects of investing. Read more.

How gender, fear, and age affect money management

  • “Men are more inclined to behave like baseball sluggers, who swing for the fences, even if it means running the risk of striking out far more often. Women, by contrast, are more like contact hitters, who are satisfied with a string of singles.” – One of several reasons women tend to be more successful investors than men, according to an April 2016 Kiplinger article. Read more.
     
  • “Acknowledging that you are emotionally unwilling to handle deep drawdowns and accepting lower long-term returns is a far better idea than fooling yourself into believing you can buy and hold, and then selling into a 40% decline, which unfortunately is all too common.” – Michael Batnick, author of The Irrelevant Investor blog, arguing on 3/11/16 that many investors are ill suited for buy-and-hold investing. Read more.
     
  • “It’s very similar to the research on driving skills. Since it happens so gradually, we’re not aware our abilities are getting worse over time.” – Michael Finke, Professor of Personal Financial Planning at Texas Tech University, describing his research that found financial literacy declines as people age, but their confidence in their ability to make good financial decisions does not. Reported by Texas Tech Today on 3/10/16. Read more.