Many investors agonize through the process of fund research. They seek out the “hot hands” — hoping to find a winning manager. Even though every fund prospectus states that, “...past performance does not guarantee future results,” investors still believe that a track record means something.

Drops in the stock markets are scary for most investors.  Stock market declines are so scary that investors typically sell after their stocks have gone DOWN, and wait to buy stocks back when the stocks have gone UP.  In other words investors sell low and buy high. 

Maybe you know of an extraordinary stock broker or fund manager or TV personality who strikes you as being among the elite few who can make the leap. Maybe they have a stellar track record, impeccable credentials, a secret sauce or brand-name recognition. Should you turn to them for the latest market tips, instead of settling for “average” returns? 

Our desire for high returns and no risk are mutually exclusive. Making money requires risk and the level of perceived risk taken is directly tied to expected return. In other words, making more money means taking more risk. It’s a very simple reality that most investors wish they could overcome. However, Wall Street is happy to make it appear that you that you can "have your cake and eat it, too."

Trend following is common human frailty. Could that be why so many investment advisors are pushing alternative investments to their clients when it’s difficult to justify either their investing rationale or high fees?

When it comes to buying or selling a home, most of us already know that the price depends on three things: location, location, location. Asset location is a similar, if less familiar rule that applies to your investments. Managing asset location within your portfolio can help you keep as much of your wealth as possible – even after the tax man takes his cut.

Peter Lynch's best selling book, “One Up on Wall Street.” perpetuated the myth that mutual fund managers were capable of “Beating the Street” (the title of his second book). It was because of the success of Lynch’s Fidelity Magellan fund that I accepted the conventional wisdom of the day; a smart manager can beat the market.

DIY or do-it-yourself is common for home improvement, (some) car maintenance, and lawn care.  It is not so common for surgery, legal matters, or dentistry.  Why?  The skills needed for the former are far easier to develop than the skills for the latter activities.

A plethora of new educational resources will be coming your way over the next few months. A new smart phone app is in the works. Tom and I are working on a new book about 401k and 403b plans. Two new series of classes are in the works, along with much more.

Last week we looked at research from Boston College that showed 50% of near retirees (baby boomers) are projected to have a lower standard of living in retirement due to inadequate income from social security, pensions, and savings.  This week we look at a new book by William Bernstein titled “If You Can: How Millennials Can Get Rich Slowly”.

Is the stock market too high? It’s impossible to know. We know it was too high in early 2008, just as we know it was too low in early 2009.

You’ve probably heard us whistle this tune so often that you can sing along yourself: Among the best ways to maximize expected returns is to minimize the costs involved in achieving them.  This begs the question: What about those fees you pay your advisor? Are they earning their keep? 

Human beings love stories. But this innate tendency can lead us to imagine connections between events where none really exist.

We talk about the market is present tense even though it is always past. What has just happened directs our perceptiuon of what's to come. Some of biggest investing mistakes occur from expecting what has just transpired will continue. It's all part of human cogition defect know as the "recency effect."