Few things in our profession are more frustrating than when financial advisors deliver bad financial advice. It doesn’t have to be that bad financial advice is dishonest or delivered for the wrong reasons (like it is so often, for the benefit of the advice-provider). It is just that misguided or blatantly wrong financial advice hurts consumers and [...]
Last Friday here in Atlanta, local businesses closed, restaurants shut their doors by late afternoon, school activities were cancelled, and the Atlanta metro region went under a State of Emergency in anticipation of a debilitating storm. Meteorologists unanimously predicted 2-5 inches of snowfall later that evening – an obviously dire amount of snowfall by southern [...]
The following is our quarterly investment letter that was recently sent to clients. 75 years ago this month, a thrilling World Series concluded what many baseball historians decidedly describe as the best baseball season ever. That season is notably remembered for two historic accomplishments: Joe DiMaggio’s 56-game hitting streak and Ted Williams finishing the season with [...]
Most investors like the idea of waiting for a period of calm to invest. Our brains tell us it is better to wait until there is clarity and risks have subsided before investing. And our brains have good reason to work this way. For our ancestors, waiting until things calmed down was necessary for survival. [...]
The most interesting research project I worked on in graduate school was a study of statistical inefficiencies in sports gambling markets. My small team of fellow classmates hypothesized on all kinds of possible anomalies in sports. Was the over/under line inefficient when high scoring NBA or NFL teams were competing? Were teams coming off a [...]
On a recent visit to the Museum of Modern Art (MoMA), I surprisingly stumbled upon an exhibit featuring classic video games such as Tetris, Asteroids, and Pac-Man. The games were displayed on active video screens with an adjacent explanation of the creativeness or design elegance for why they were each chosen. In their heyday, these [...]
The following is an excerpt from the quarterly letter we recently sent to clients on the lure of investment prediction. Rock-paper-scissors ranks somewhere near the top of a list of universally known childhood games. The game separates itself from games of pure chance like coin flipping or the card game war in that participants can gain an [...]
Anyone who attended summer camp as a kid likely equates marshmallows with two things – a fundamental ingredient in making s’mores and the only ingredient needed for a game of chubby bunny. When a psychologist hears the word marshmallow, however, the first thought may not be of s’mores or chubby bunny. Instead, a psychologist likely [...]
The following is an excerpt from the quarterly letter we sent to clients. We are an overconfident species. 93% of us believe we are above average drivers, 86% of us believe we are better looking than the average person, and 80% of us think we’re smarter than average. We are convinced that we know more [...]
The following is an excerpt from the letter we wrote to clients in July 2013 and provides a worthy lesson in behavioral investment. Peter Bernstein in Against the Gods states that the evidence of investor behavior “reveals repeated patterns of irrationality, inconsistency, and incompetence in the ways [they] arrive at decisions and choices when faced with uncertainty.” [...]
