The wisdom of diversification in money management, as encapsulated in the old proverb “don’t put all your eggs in one basket” is an idea that has been around for thousands of years. An ancient Jewish writing known as the Talmud, written between 1,200 BC and 500 AD, contains this advice: “Let every man divide his…
Live actively, invest passively. A “Pearl of Wisdom” from the book The Boglehead’s Guide to Retirement Planning Deadheads: Fans of the rock band The Grateful Dead. They can be recognized by their tie-dye T-shirts and Birkenstock sandals. Their preferred mode of transportation is a vintage Volkswagen Bus which they travel the country in following the…
In an earlier post we established that the odds are heavily against you beating stock market benchmarks investing on your own (You Can’t Beat the Market). After accepting this fact most people’s next thought is to hire someone who can. Is this a wise strategy? Dart Throwing Monkeys In his classic investing book A Random Walk…
The Philosopher and the Cartoonist The Middle-Eastern philosopher is Nassim Nicholas Taleb. Taleb is a Lebanese-American author, academic, statistician, and philosopher. He achieved riches in bond trading and fame from his best-selling books Fooled by Randomness and The Black Swan. He is pretentious, overbearing, and arrogant. He believes he has the world figured out and…
My latest post, titled “You Can’t Beat the Market” is currently running on Rockstar Finance, “A Collection of Awesome Money Articles.” If you haven’t read it yet, check it out below, and then go to Rockstar to read some of the other great personal finance articles there.
Who Is Your Competition? Famed hedge fund manager Michael Steinhardt was once asked what the single most important thing an amateur investor could learn from him was. His arrogant but informative answer was “That I’m their competition.” Every time you buy or sell a stock or mutual fund there is someone on the other side…
If you want to take volatility out of your portfolio, check it less often. –Ronald H. Muhlenkamp, American investor and businessman I am not a “dog person.” I didn’t grow up with dogs and as an adult I didn’t have any desire to own one. My wife, Alice, and I agreed on this. However, we didn’t…
Some investors tend to avoid risk when it comes to their investments. They want returns without any risks, but avoiding all risk is the same as avoiding potential returns. –Mark T. Hebner, businessman, investor, and author The Parable of the Talents I love the parables of Jesus from the New Testament. One of my favorites…
My biggest influence in investing, and the person I most admire in the financial world, is John C. Bogle, founder of Vanguard Mutual Funds. My favorite Sunday morning comic strip is Dilbert, by Scott Adams, which pokes fun at corporate and office culture. Bogle and Adams, vastly different in age, style, and occupation have each…
Many years ago I heard a story that illustrates the principle of investing in a memorable way. I can’t remember where I heard it, or who I heard it from, but I have never forgotten it. The story is about a young boy named Tommy growing up in a much simpler time than today. Tommy’s…
