Power of Long-Term Investing (Updated)
The most important dynamic in investing is time. Time and the concept of compounding should be simple and practical but are often misunderstood and overlooked. Source: Jeremy J Siegel, Stocks for the Long Run. The definitive guide to financial market returns and long-term investment strategies, McGraw Hill, 2014, pp6. This chart is a great representation […]
Compound Interest: The Eighth Wonder of the World
Would you rather have one million dollars in cash or one dollar that doubles for 20 days straight? At face value, you might think “Why would I not take the one million dollars over one dollar right now?” Thinking this way would be short-sighted because, with a little bit of patience, you would be awarded […]
Average Returns are Anything but Average
Today, we will deconstruct a common myth about market returns. Before I get started, I recently addressed some common investor mistakes and how to avoid them. If you missed them or would like to reread them, you can do that by simply clicking here, here, and here. Do you know what the average price return […]
Investing vs Gambling: What’s the Difference?
Gambling has never been so popular and accessible as it is today. Sports gambling is now legal in over half of the US. And if you live in one of the states, like Ohio, where it recently became legal, this is no news to you. Like gambling, investing has also grown in accessibility with the […]
Common Investor Mistakes – Part 3: Put Your Money to Work!
In Part 1 of this series, we discussed Emotional Trading and the behavior and cognitive biases displayed when making this mistake. In Part 2, we expanded on that discussion, going through Risk Tolerance, which is the foundation of portfolio construction and can help you avoid making emotional trading decisions. In Part 3 of this series, […]
Value vs Growth: What is the Difference?
Value vs Growth is a common theme in the investing world. Commonly investors will bucket a stock into either growth or value. The problem with this practice is that value and growth are not mutually exclusive. Growth and valuation are two separate considerations in evaluating a company or a stock. If a company exhibits high […]
Common Investor Mistakes – Pt. 1: Emotional Trading
Are you making avoidable mistakes in your portfolio because of some behavior bias? If you answered no to this question, you might be suffering from having an overconfidence bias which will ultimately lead to making mistakes. Much of today’s academia concentrates on traditional finance. Traditional finance ignores how individuals actually behave and instead focuses on […]
What Does It Mean To Have A Diversified Portfolio?
There are many misconceptions about diversification and what it means to have a diversified portfolio. One of the questions I get a lot is: “I own XYZ stock. Is it a good time to sell it?”. Usually, my immediate follow up, even before looking into the stock, is how big of a position is the stock in your portfolio […]
Importance of Long-Term Investing
A common term tossed around in the investing industry is “long-term investing,” but what is “long-term” and why is it important? In the eyes of the Internal Revenue Service, long-term capital gain treatment is afforded to those assets held for more than one year. When investors discuss long-term investing, they are talking about 10-20-30 years […]
4 Common Wealth Building Mistakes
Building wealth can be confusing and complex at times. To be successful, one must take a holistic approach, requiring an understanding of many different aspects of wealth management. Many of these components are intertwined. For example, ask yourself if you have a sound financial plan? If you answered yes, does the plan take into consideration […]