Investment Phrases About Emotions

Money Proverbs

The intelligent investor is likely to need considerable will power to keep from following the crowd.  - Benjamin Graham The herd instinct is the strongest emotion; especially dangerous in investing.  (Unknown) When making investment decisions your emotions are often a reverse indicator of what you ought to be doing.   (Unknown) When everybody likes a [...]

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Be Fearful When Others Are Greedy

Value

One of Warren Buffett’s most famous investment sayings is “Be fearful when others are greedy. Be greedy when others are fearful.” The late great global investor John Templeton said “The time of maximum pessimism is the best time to buy and the time of maximum optimism is the best time to sell”. It’s not an [...]

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Mutual Fund Expense Ratio: How Much Does It Hurt Investment Performance?

Portfolio Management

Every investor should have a basic understanding of the mutual fund expense ratio; including how much it can hurt investment performance. What is a Mutual Fund? Mutual funds are an investment vehicle created by portfolio management companies to combine or pool the money of many investors. The owners of the shares then share proportionately in [...]

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Disadvantages of Diversification in Investing

Portfolio Management

We rarely focus on the disadvantages of diversification in investing because we are taught the purpose of portfolio diversification is to lower portfolio risk. In fact a certain amount of diversification is crucial, otherwise you will be taking risk that you will not be compensated for. However, some lessons can be over learned. Diversification done [...]

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Asset Correlation – Definition, Examples, Problems, and Why It Is Important

Asset Allocation

Definition of Asset Correlation Asset correlation is a measurement of the relationship between two or more assets and their dependency. The correlation measurement is expressed as a number between +1 and -1. A zero correlation indicates there is no relationship between the assets.  A +1 indicates an absolute positive correlation (they always move together in [...]

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Position Sizing: Essential Money Risk Management Concept

Risk

Position sizing is an essential yet often under appreciated money risk management concept. It can be the difference between success and failure. Position sizing is among the most important concepts of stock trading, but is also absolutely critical to long term investors. We are going to explore position sizing as it relates to long term [...]

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Is Gold a Good Investment?

Investment Analysis

Is Gold a good investment? It depends on why you are buying the precious metal. You need to ask yourself: is gold an investment or a store of value? What is an Investment? There are many definitions of investment, but I like to use the economic definition because I believe it gives clarity to my [...]

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Consensus Theory and Contrarian Investing

Value

In this post we will explore how the value investor can use consensus theory and contrarian investing to take advantage of mis-priced assets. What is Consensus Theory in Investing? In investing consensus theory there is general and widespread agreement in the investment community. This agreement could be about the prospects for a particular individual investment, [...]

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3 Ways to Reduce the Effects of Stock Market Volatility

Value

Instead of being a victim of stock market volatility a value investor can take advantage of it to increase investment returns. The value investor must be able to think the opposite, or contrary, to what others are thinking; particularly when there is a large majority or consensus on an investment. Technology has increased the ability [...]

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Stock Market Bubble Signs

Value

A bubble is a spike in price far above the fundamental or intrinsic value of an asset. Bubbles are usually identified conclusively only after prices return to fundamental intrinsic values. This is why an investor should look for market bubble signs long before a bubble is identified. We want to look for bubble signs so [...]

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