4 Secrets to Better Investing

1) Turn off the financial noise machine. Information overload is the norm in today’s world.  We demand it.  We expect it.  Your mind, my mind, and all of our minds are wired to digest information, emotionally respond to the information, and then to do something as a result.  This is why and how advertising works.  [...]

Why Non-Deductible IRA Contributions Are Generally a Bad Idea

High income families faced with high annual taxes are often looking for ways to reduce their taxes or save additional dollars in tax-efficient ways.  Unfortunately, these well-intentioned pursuits often result in irrational behaviors (such as permitting the government to shortchange your retirement savings) or unfavorable outcomes (such as paying more taxes than you would have [...]

Parallels of Sports Betting and Investing

The most interesting research project I worked on in graduate school was a study of statistical inefficiencies in sports gambling markets.  Our small team of students 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 bye-week [...]

The Lure of Investment Prediction

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 [...]

Marshmallows and Long-Term Investing

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 Link Between Soccer and Investing

The following is an excerpt from the letter we wrote to clients this month.  It offers a useful lesson in the behavioral tendencies of humans. Many Americans tuned in to watch the World Cup during the past month.  Some even learned player names and now better understand the game’s subtleties.  From this experience, it likely became [...]

Behavioral Investment Flaws and The Irrational Bias For Action

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.”  [...]