Behavioral finance is an important subject that all investors need to educate themselves. As humans all our investment decisions are driven not always by facts and rational reasons. Emotions play a big part whether we are buying or selling a stock or any other asset. We also suffer from all types of bias from information …
One of the important concepts to be aware of with equity investing is the survivorship bias. Simply put this theory means ignoring losers and focusing on winners which can skew one’s thinking or results. For instance, hundreds of biotech firms are launched in the public markets but only a handful or even less are highly …
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Multiple studies have shown that individual investors always tend to earn less than the funds they are invested in especially over the long-term. This is because many investors try to time the market and hence sell the mutual fund or ETF at the presumed peak and then buy back again at the wrong time as …
Continue reading ‘On The Gap Between Investor Returns And Fund Returns’ »
US equity markets have been more volatile in the past few weeks. Investors are worried about a variety of factors such as growing debt, rising bond yields, China, excessive valuations and of course the most important of all – inflation. It is widely accepted that stocks are the best asset class to own to beat …
Continue reading ‘Will Inflation Hurt Stock Returns? : Chart’ »
Investing for the long-term is the best investment strategy as the stock market traditionally goes higher over the long-term but tends to be volatile in the short-term. Over the many decades from 1926 thru 2020, S&P 500 has had many bull markets than bear markets. In fact, many bull markets were longer than bear markets. …
Continue reading ‘Bulls, Bears And The Benefits of Long-Term Stock Investing: Chart’ »