Blog.
How Is Progress Defined?
Everything is cyclical. Habits change slowly, and most humans are not early adopters, not ready to embrace new realities until there is often significant discomfort or even pain. Thankfully, we humans are somewhat rational in our behavior and will hear the drum roll of progress if things seem cheaper, better or more convenient.
Respecting the Three C’s
Over my career, I’ve spoken and written quite a bit on the topics of complexity, connectedness, and change. Respect for these “three C’s” is something that our team at FIM Group regularly discusses as we analyze investments and manage portfolios. I recently circulated a report published by the World Economic Forum (WEF) in Davos, Switzerland, that includes Figure 1, showing major trends and five categories of risks (economic, environmental, societal, geopolitical, and technological) facing the global economy today.
Stein's Law
Herbert Stein, Chairman of the Council of Economic Advisers under the Nixon and Ford administrations, came up with a principle many years ago that has guided me over several decades of professional investing. Stein’s Law, as it is now known, is simply this: “If something cannot go on forever, it will stop.” In other words, unsustainable trends are unsustainable.
A Turbulent Start to 2016
With many financial markets off to a volatile start in 2016, our team has been fielding an understandable increase in calls from concerned clients. We’ve aggregated some of the most frequent questions and our responses for this month’s investment strategy update.
Staying Disciplined Through the Bumps
Investment markets fluctuate. We all know that they do, and today they are fluctuating at lightning speed. The advent of electronic trading, exchange-traded funds (ETFs), and retirement accounts that can be switched with a click or a call has led to an avalanche of trading. TD Ameritrade, a brokerage that caters to individual investors, has seen its average trading volume per account rise around 60% in the past 10 years.
Where Have All the Long-Term Investors Gone?
Everything is cyclical – spring/summer/fall/winter…recession/recovery/boom periods…deflation/inflation. An experienced farmer knows full well that weather directly affects the harvest, so he is prepared for both good and bad years. His success lies in the patient preparation and planting of the soil. Today, it seems that investors are obsessed with short-term performance (three years or fewer).
Anxiety, Lazy Brains, and Investing
Why invest? Why get an education? Why not just live for today? Why plan, be forward-looking or think about the future? Of course these are loaded questions, but the answer is simple: We must be forward-looking because we live in the future and have no choice but to assume that the world will be here tomorrow, that the economy will not crumble and my home will still be standing.
Margin of Safety
Comparative analysis, realistic analysis and accurate thinking are attributes of investing that are not often discussed. We are wired to oversimplify and be “lazy-brained,” and nowhere is the concept of the lazy way to riches more prevalent than on Wall Street.