It is bad enough that investors lost a lot of money in 2008 during a frightening world financial crisis. The sudden and swift recovery that began in March may be even worse for panicked investors who had barely a day to catch their breath between swings in the market. Now many investors who suffered through the bear and still regret […]
Client Letter – Q2 2009
During the past quarter, we have witnessed the strongest rebound since the markets began falling in late 2007. Global stock markets climbed sharply in April and May, and then held onto most of their gains during the month of June. The following chart shows the 3-month, 5-year, and 10-year performance of many DFA funds (representing different asset classes) compared to […]
Client Letter – Q1 2009
When returns are poor (and sometimes even when they’re good), investors wonder if things have changed. Is this time different? Does a buy-and-hold strategy still make sense? Well, the reality is that nothing has really changed. This is just how markets work. Not surprisingly, I am advising my clients to “stay the course” (at the minimum) and to invest new […]
Why intelligent people fell for Bernie Madoff’s Ponzi scheme
The Ponzi scheme run by Bernard Madoff may have cost his investors some $50 billion. For many, the big question is how could seemingly sophisticated investors be so stupid? Even more important, what lessons can we learn from their mistakes so that we can avoid the next con artist who comes along? Interviews with victims show that class status, exclusivity, […]
Those who try to time the stock market get nipped by black swans
Investors suffering during major bear markets are tempted to “time” the market: to sell and avoid the downturn, and then reinvest before the inevitable recovery. It now seems obvious to these investors that anyone with half a brain should have foreseen last year’s credit crisis and massive worldwide fall in asset prices. By selling out ahead they would have preserved […]
If the experts cannot predict the markets, you can’t either
Were you able to predict the global bear market that sucked trillions of dollars out of investors’ pockets in late 2008? In retrospect, it looks like it should have been easy to predict—after all, the subprime mortgage crisis had gone on for a year before stocks started crashing in October 2008. It seems obvious that the economy was collapsing and that […]
Client Letter – Q4 2008
Happy New Year! Yes, you are still alive and breathing! The year 2008 was the second worst ever for the U.S. stock market. Only in 1931 did the Standard & Poor’s 500 Index fall by more than 37 percent, turning in a worse showing than 2008. Our overall returns for the full year ranged from -10% to -42%, depending on […]
Client Letter – Q3 2008
I want to begin this quarterly letter by acknowledging how wise you have been to “stay the course” during the most severe stock market decline since the Great Depression. I am very inspired by your courage and commitment to keep a long term perspective. The turbulence that rocked the financial markets over the last several weeks has terrified most investors […]
Want to be a good investor? Stop making these five mistakes
Most investors could dramatically improve their returns by eliminating five common mistakes from their portfolio management toolboxes. One of these common mistakes is so deadly it could wipe you out, while the others can cost you big time. The most dangerous mistake you can make is betting everything on one investment. This is akin to putting all of your chips […]
Why it is a bad idea to get out of the market in a downturn
Doesn’t it seem reasonable that when the stock market is dropping month after month you should get out, avoid more losses, and wait for the upturn? Unfortunately, this is just what many investors do. Once they are out of the market, they often don’t begin investing until well after a recovery has occurred and it looks very apparent that the […]
