More on Related Themes
2013-05-16 Searching For a New Investment Paradigm by Philip Lawton of Research Affiliates
Investment management is supposed to be built on brilliant minds’ novel insights and innovative approachesor so our training and traditions have led us to believe. We celebrate our best investors, such as Warren Buffett, Peter Lynch, and Bill Gross, and our best financial theories, such as modern portfolio theory (MPT) and the efficient markets hypothesis (EMH).
2013-05-10 The Importance of Being Different by Franois Sicart of Tocqueville Asset Management
In his latest essay, Francois Sicart, Founder and Chairman of Tocqueville Asset Management, writes about how superior investment managers outperform their market benchmarks -- by taking advantage of volatility, among other things -- as well as how to properly evaluate investment performance.
2013-04-23 How to Help Your Middle-Class Clients Retire by Dan Richards (Article)
The burgeoning field of behavioral finance points to some simple methods to help clients save more, invest their savings more effectively and maintain motivation through tough patches. Using these methods, advisors can help middle-income clients take the steps to increase the odds of being able to retire when they want, how they want – and to reduce their stress along the way.
2013-04-17 Gold Is Crashing...And the Storm Begins by John Rothe of Riverbend Investment Management
The storm in the US stock market that I have been talking about for the past few weeks may have finally arrived. After weeks of poor economic data, we are starting to see the first crack in the current euphoria in the markets.
2013-04-16 Using Behavioral Data to Earn Superior Returns by C. Thomas Howard, PhD (Article)
Emotional crowds dominate pricing; that was the first basic principle, which I demonstrated last week. This would seem to indicate that BDIs earn superior returns by taking positions opposite the crowds. But this is not necessarily the case.
2013-04-16 2013 US Financial Markets by Clyde Kendzierski of Financial Solutions Group
In the fall of 2012 the S&P 500 came close to our forecast high (S&P- 1500) Last year we suggested that not only was the S&P likely to reach 1500, but also speculated that renewed bullish sentiment could take us back to the old highs of 1565. When the S&P touched 1563 a couple weeks ago, I started getting client calls complimenting my prescient forecast.
2013-04-09 The Evidence that Emotion Dominates Market Pricing by C. Thomas Howard, PhD (Article)
Last week, I introduced the concept of behavioral portfolio management (BPM) as a way to build superior portfolios. BPM is built on the dynamic interplay between two investor groups and rests on three basic principles. I will discuss the first basic principle in this article, the second in a series of five.
2013-04-02 New Research on Investor Behavior by C. Thomas Howard, PhD (Article)
Market theory passed through two distinctly different paradigms in the past 80 years and is experiencing the rise of a third. Those transitions have marked the introduction of improved ways to explain price movements. The ascendant paradigm, based on new research in the field of behavioral economics, promises to offer superior guidance to investors and advisors who hope to exploit market inefficiencies.
2013-03-27 Call Him Ishmael by Jeffrey Bronchick of Cove Street Capital
One of the hardest things to conquer as a value investor is the concept of "price." The industry remains mired in fascination with abstract prices like 100, 1,000, 14,000, previous highs, new lows, etc. The stock is up x% from x dollar price; it is down x% from x price. There is also much in print and general fretting in regard to "price action," with lots of attention paid to where the stock has "been" and how this move relates to other "moves," as in "the largest move since last December 12th."
2013-03-14 Newsletter by Harold Evensky of Evensky & Katz
In the latest edition of his client newsletter, Harold Evensky highlights a number of interesting bits of news, including a must-see destination for your friends, your kids and your grandkids, some advice from Warren Buffett, a tip from Albert Einstein and the latest data on hedge fund performance.
2013-03-11 Who's Selling And Who's Buying As The Dow Trades In Record Territory? by John Rothe of Riverbend Investment Management
Last week turned out to be another positive week for investors, as the S&P 500 finished the week up 2.2 percent. However, as my regular readers know, I consider the current market risk high, and have been building a case these past few weeks that we will soon be entering a bear market.
2013-02-19 Ducks, Swans and Old People by Mariko Gordon (Article)
Today we talk about experience. Specifically, why it's overrated and how an understanding of history helps you, as an investor, spot inflection points and exploit misunderstandings on the part of other investors.
2013-02-08 Overcoming 3 Bad Investing Behaviors by Russ Koesterich of iShares Blog
Do you avoid the stock market? Shun diversification? Trade inefficiently? Russ and guest blogger Nelli Oster an investment strategist on Russ' team examine three common bad behaviors among investors and provide tips for potentially mitigating their impact.
2013-02-04 A Gross Underestimate by Jonathan Coleman, Soonyong Park of Janus Capital Group
As we enter 2013, we felt it would be an appropriate time to revisit one of last years most controversial predictions of future equity performance. We acknowledge that equities in general may not continue to deliver the same real rate of return they have over the last century; however, we believe the glum outlook for the asset class forecasted by Bill Gross last year misses the mark. Our estimates of future equity returnsbased on three different approachesall point to a meaningfully higher forecast than Gross' pessimistic prediction.
2013-02-01 A Gross Underestimate by Jonathan Coleman and Soonyong Park of Janus Capital Group
The glum outlook for the asset class forecasted by Bill Gross last year misses the mark. Our estimates of future equity returnsbased on three different approachesall point to a meaningfully higher forecast than Gross pessimistic prediction.
2013-01-11 Thanks, Everybody...We'll be Right Back! by Colin Moore of Columbia Management
The Washington Comedy Club has taken a brief intermission and will be back in session shortly to resume the show. Please enjoy the facilities of this great country, free of charge, while you wait. Ignore the "Nero" character in the far corner playing the fiddle. Apparently, he isn't part of the show. Economic uncertainty emanating from fears of the U.S. fiscal cliff has been deferred but not avoided.
2012-12-07 Saving for Retirement: Stage 1 by Team of Franklin Templeton
Most of us have certain expectations about our retirement. We may daydream of the golden years as a time to explore exotic locales, perfect a golf swing, or just relax. The reality is often quite different, particularly for those whove done more daydreaming than planning, or who have suffered setbacks to their portfolios in 2008-2009 and feel a sense of paralysis. Knowing where to begin can be confusing, and as with most things, overcoming inertia to take that first step certainly isnt easy.
2012-11-17 On Aging Gracefully by Dan Ariely of Dan Ariely Blog
The moral of the story is that we should always question prevailing opinion. And maybe its best to think of aging as Mark Twain did: Age is an issue of mind over matter. If you dont mind, it doesnt matter. One thing is certain though: never, ever attempt a comb-over.
2012-10-25 October 2012 Newsletter by Harold Evensky of Evensky & Katz Wealth Management
Oh the joys of driving to a baseball game; sitting in endless traffic four miles from the stadium, inching past full lot after full lot, or not finding your car when it's time to go home (was it D-4 or 404 Green?). Now you can streamline your parking experience with ParkWhiz, a Chicago-based company that's recently gone national. This and other missives from Harold Evensky.
2012-10-23 Viral Marketing to Women by Tony DiLeonardi and Barbara Kay (Article)
Expanding your client list is a never-ending goal. Even if you already have a large and profitable client base, you need to replenish it over time. That perpetual chase can be a distraction - unless you can get clients to seek you! That's viral marketing at its best.
2012-10-19 Getting Trampled by the Herd by Team of Franklin Templeton Investments
Many people are programmed to assume the consensus view is the correct one. They see a particular movie based on a number of positive reviews, buy a particular phone because people have camped out in front of a store to get it, or change their hairstyle based on the latest fad. It's extremely hard to go against the crowd, even if you can't afford that fancy new phone, or that new hairstyle isn't actually so attractive on you. It may be easy to laugh off falling prey to a gadget trend or a hairstyle, but what happens when it's your investments that have been trampled by following the herd?
2012-10-16 A Partnering Approach for Women Clients by Tony DiLeonardi and Barbara Kay (Article)
You probably hear a lot of talk about 'landing' and 'retaining' clients – implying that a client is a passive object, for you to win and hoard. This terminology, which we are all guilty of using, casts advising as some sort of grand competition. Men may be comfortable with a competitive approach. But women are not!
2012-10-02 Connection is Key When it Comes to Women by Tony DiLeonardi and Barbara Kay (Article)
Men and women connect differently. Male relationships tend to be task-focused and independent, whereas women are relationship-focused and cooperative. For advisors seeking to build rapport with female clients, it's vital to understand their approach, and conduct yourself appropriately to win their trust.
2012-09-04 New Research - How to Help Clients Make Better Decisions by Joe Tomlinson (Article)
Making decisions is not something human beings are very good at. We do a poor job of predicting what will make us happy in the future, we often misjudge our ability to handle risk, and our decisions are plagued by subtle biases that throw us unwittingly off course. Because the essence of financial planning is making decisions about the future, it's critical that clients and advisors understand how decision-making biases can be identified and overcome.
2012-08-25 Alibis for Sale by Dan Ariely of Dan Ariely Blog
Ever since The Honest Truth about Dishonesty was published, people send me emails about strange things they come across related to dishonesty, like this one offering alibis and excuses for absences as well as assistance with a variety of sensitive issues. Here's my response.
2012-08-15 Understanding Ego Depletion by Dan Ariely of Dan Ariely Blog
From your own experience, are you more likely to finish half a pizza by yourself on a) Friday night after a long work week or b) Sunday evening after a restful weekend? The answer that most people will give, of course, is "a". And in case you hadn't noticed, it's on stressful days that many of us give in to temptation and choose unhealthy options. The connection between exhaustion and the consumption of junk food is not just a figment of your imagination.
2012-08-07 Robert Shiller on the Social Benefits of Finance by Laurence B. Siegel (Article)
It's a bad sign for the finance industry that one of its leading minds - the distinguished Yale economist Robert Shiller - has felt compelled to write a book in order to defend the idea that finance itself is a constructive pursuit, worthwhile to modern society. Have things really gotten that bad?
2012-07-25 A Couple Questions by Dan Ariely of Dan Ariely Blog
Excuses. Justifications. Rationalizations. Stories. Stretching the truth. So many ways to whitewash the lies we tell ourselves and others. Here are a few questions that might remind you of your own dalliances with dishonesty.
2012-07-11 Green Consumption: Its Not All Positive by Dan Ariely of Predictably Irrational
There was a time when farmers markets, eco products, recycling, and renewable energy were squarely in the tree huggers domain. Then, somewhere along the line, green went mainstream, turning environmental awareness into a socially desirable trait and a mark of morality.
2012-06-22 Its All a Big Mistake by Howard Marks of Oaktree Capital
Mistakes are a frequent topic of discussion in our world. Its not unusual to see investors criticized for errors that resulted in poor performance. But rarely do we hear about mistakes as an indispensable component of the investment process. Im writing now to point out that mistakes are all that superior investing is about. In short, in order for one side of a transaction to turn out to be a major success, the other side has to have been a big mistake.
2012-06-20 Social Power and Morality by Dan Ariely of Predictably Irrational
Dan Ariely quotes the graduation speech of Michael Lewis at Princeton in 2012 that discusses an experiment exploring the relationship between power and morality. There is a great deal of research concerning the link between social power and morality, and most of it suggests that absolute power is not required to change peoples morals; sadly it tends to show that more power leads to less care for others, and less moral behavior.
2012-06-14 A Year in the Life of a City Bike. by Dan Ariely of Predictably Irrational
At one point the people who run Hudson Urban Bikes, a bike rental company in the West Village, wondered what would happen to a bike if it was left chained to a post in the city for one year, and they took a picture of it each day to document its progress. The bicycle began its experimental journey equipped with all necessary equipment plus a basket, water bottle, splashguard and a few other goodies.
2012-06-13 The Tip of the Iceberg For Dividend Stocks by Team of Columbia Management
Post-crisis equity investors seek to lower portfolio volatility. Dividend stocks have provided higher returns with less risk compared with non-dividend payers. Baby boomers are retiring now with much smaller nest eggs than they had anticipated. They need reliable sources of income and growth. Cash-rich companies are in a position to pay and potentially grow dividends, while dividend payout ratios are historically low. Active managers leverage in-depth research to uncover promising opportunities among companies likely to initiate or raise dividends.
2012-06-05 Daniel Kahneman on the Two Kinds of Thinking - Fast and Slow by Laurence B. Siegel (Article)
When advisors want to understand why their clients make seemingly irrational financial choices, odds are they will find answers in the research of Nobel-winning behavioral economist Daniel Kahneman. But guiding clients toward a better financial future is only one way to apply behavioral finance. Kahneman says we solve virtually all problems, not just financial ones, with two distinct types of thinking.
2012-05-18 Gold: The World's Friend for 5,000 Years by Frank Holmes of U.S. Global Investors
Investors have defriended gold recently in favor of the dollar, as Greek and French voters rejected austerity measures. Greeks have been responding to their escalating debt issues for a while by steadily pulling money from overnight deposits. I often say, money goes where it is best treated, and these deposits will need to find a safe haven.
2012-05-15 Searching for Big Foot by Anwiti Bahuguna of Columbia Management
For the past few years, the sovereign bond markets have pushed peripheral European countries to reduce public debt. This has meant adopting austerity measures whereby government budgets are slashed and taxes are raised. Such measures meet investors approval. However, the immediate impact of such efforts is less economic growth which is intolerable to the people in Europe. The path to sustainable growth is complicated and requires long-term investments. We believe despite decades of research on the topic, academic efforts have not found a clear answer. Perhaps finding Big Foot will be easier.
2012-04-13 The Active Management Pretend Game by Eugene Robin of Cove Street Capital
Let us start by saying that this is not an essay on whether or not a large pool of institutional asset allocators should consider an indexing strategy or not. What follows is an analysis of the question: If you are going to charge active management fees with the goal of outperforming relevant benchmarks over the longer run within reasonable risk parameters, what sort of preconditions are suggestive of a higher probability of success?
2012-04-12 Diversification 201: Implications of Diversification for Investor Behavior by Team of American Century Investments
Here we look at diversification as a tool to address many classic failings identified by the science of behavioral finance. Earlier we explained the rationale behind diversification and how it can be used for structuring a portfolio to help manage risk and maximize risk-adjusted performance. We also provided an Intro to Alternatives meant to highlight the types of strategies that can be used to diversify a traditional portfolio. In future months well address such topics as diversification in a post-Financial Crisis world, and what types of diversification strategies make the most sense.
2012-03-27 Caviar for the General by Jeffrey Bronchick of Cove Street Capital
The stock market as measured by the S&P 500 is up almost 30% over the last 6 months, and has doubled from the March 2009 lows and yet most investors remain underinvested. Despite this temporary risk aversion, we remain convinced that stocks remain a unique species: the higher the price and less compelling the value, the more they seem to be desired by investors. In addition to the number of reasonably valued assets that can be found in financial markets, this represents an anecdotally strong underpinning for a reasonable intermediate future in our opinion.
2012-03-13 Letter to the Editor - Tactical Asset Allocation v. Behavioral Finance by Various (Article)
Ken Solow, Michael Kitces and Sauro Locatelli respond to Christopher Sidoni's article, The Conflict between Tactical Asset Allocation and
Behavioral Finance, which appeared on February 21.
2012-03-12 Unlocking Concentration Risk by Nick Reilly, Mark Bennett, and David Templeton of HORAN Capital Advisors
We contend the best time to seek portfolio protection is when its cheapest. This would be comparative to purchasing life insurance when premiums are least expensive. Similarly, one should evaluate stock concentration risk when markets are positive and sentiment is good. The intent of this report is to outline the challenges associated with concentrated holdings and to introduce potential solutions to help reduce the risks associated with such holdings.
2012-03-10 Regret by Dan Ariely of Predictably Irrational
Imagine that you have a flight at 8:00 in the morning. Which would be worse, arriving at the gate, breathless, at 8:02, just after theyve closed the door, or at 10:00, thanks to a couple unplanned delays in your morning. Obviously, the first scenario would cause far more misery, but why? Either way youre stuck at the airport until the next flight, eating the same bad, overpriced food, missing whatever you were supposed to do after your planned arrival, whether thats meetings or a stroll on the beach.
2012-03-06 Why Invest? - Part 2 by Adam Jared Apt (Article)
Risk tolerance is a quality inherent in an individual or an institution. Whether quantified or not, risk tolerance is the amount of return the investor requires as compensation for the extra risk that comes with investing. It's a concept that is essential for making investment decisions, yet it is elusive and maddeningly difficult to specify. Even so, many investment advisors like to give the public the impression that they're proficient at determining it.
2012-02-28 Letters to the Editor by Various (Article)
Readers respond to Christopher Sidoni's article, The Conflict between Tactical Asset Allocation and Behavioral Finance, which appeared last week, and to Simon Johnson's commentary, Too Big to Jail, which appeared on February 21.
2012-02-21 The Conflict between Tactical Asset Allocation and Behavioral Finance by Christopher J. Sidoni, CFA, CFP (Article)
How’s this for irony? Certain investor behavior creates the conditions for a tactical asset allocation strategy to succeed – but the same behavior simultaneously Increases the likelihood that clients will not follow the strategy. Recent research by Ken Solow, Michael Kitces and Sauro Locatelli identified a promising approach to tactical portfolio strategy, but our firm’s experience indicates clients will be reluctant to follow this approach –particularly when the expected payoff is highest.
2012-02-14 ‘The Greatest Anomaly in Finance' by Geoff Considine (Article)
If I told you that there is an easy-to-exploit market anomaly that has enabled investors to consistently and substantially outperform the market with less risk for more than four decades, your first instinct might be to roll your eyes. After all, the unending quest to improve returns while lowering risk has yielded countless methods with initial promise that subsequently collapse under further scrutiny.
2012-02-14 The Safety-first, Goals-based Approach to Financial Planning by Wade Pfau (Article)
Little of what is taught in traditional investment textbooks is of value in personal financial planning. Risk is not standard deviation; it is the probability and consequences of not meeting one's goals. That real-world perspective animates a new book by Zvi Bodie and Rachelle Taqqu that implores advisors and their clients to lock in the funding of their essential expenses before worrying about their discretionary goals.
2012-02-14 Is a Picture Worth a Thousand Basis Points? by Mariko Gordon (Article)
Lately I'm seeing twins everywhere - both the human kind and in the investment patterns of our business. I will explain why the positive results we've seen when selling stocks after a big break in price can often lead to equally negative results - a mirror image twin - when applied on the buy side.
2012-01-28 Men, Women, and Pain by Dan Ariely of Predictably Irrational
If youve been to the doctors office recently with any kind of complaint, its likely you were ask to rate the pain you were experiencing on a scale from 0 to 10 (being the worst pain possible). Well, a group of researchers from the Stanford University School of Medicine recently analyzed the self-reported pain measurements from 11,000 medical records from 2007-2010 and discovered something surprising: women report greater levels of pain than men for the same injuries and ailments.
2012-01-17 A Nobel Laureate’s View on the US - A Debt Problem, but an Unemployment Crisis - Video by Dan Richards (Article)
Peter Diamond is a professor emeritus at MIT and the winner of the 2010 Nobel Prize in Economics for his work on unemployment and labor market policy. In this interview, he discusses the degree to which US unemployment is a structural problem and whether it can be reduced through fiscal stimulus. This is the video of the interview.
2012-01-03 The Best of Carl Richards by Carl Richards (Article)
Carl Richards' new book, The Behavior Gap, goes on sale today. He shared with us his 10 favorite drawings.
2011-12-13 Harnessing the Power of Momentum by Michael Nairne (Article)
A market phenomena that we can harness on behalf of our clients is momentum - the propensity for price trends to persist in the short-term. I examine the origins of momentum, illustrate its return premium and consider how managers can leverage momentum on behalf of investors.
2011-11-18 Behavioral Finance (Why Watching CNBC Wont Make You Rich) by David Edwards of Heron Financial Group
The current confluence of strong and rising earnings, low stock price valuations and exceptionally low interest rates presents one of the best stock buying opportunities in 50 years. Most Americans will not take advantage of that opportunity because most invest with their hearts, not with their heads, and right now their hearts are filled with fear! To help our clients invest with their heads, we present this commentary on behavioral finance.
2011-09-13 The Handicap of Experienced Investors by J.J. Abodeely, CFA, CAIA (Article)
In the investment business, assets under management are concentrated with the largest and most established firms. Understandably, investors tend to allocate capital to managers after they've established a good track record. Unfortunately, for many, the analysis stops there. By failing to separate good results from identification of what makes a great investment manager, investors are primed for disappointment.
2011-09-06 Predictably Incorrect by Bob Veres (Article)
I had to read through this commentary by behavioral economics researcher Dan Ariely twice before I was willing to draw the obvious conclusion. It's the biggest bunch of hooey I've ever read in the financial planning press.
2011-09-06 How Advisors can Improve Client Returns by Dan Richards (Article)
There's a growing body of behavioral finance research on what investors can do to improve the performance of their portfolios. But how about advisors - what can they do to improve investor returns? Some new research answers that question.
2011-09-02 Target Fixation by Kendall J. Anderson of Anderson Griggs
When it comes to portfolio management, most professionals are forced to practice target fixation with your money. Their target is normally a predefined index of common stocks or bonds and they are rewarded based on their ability to exceed the returns of their target. This target fixation leads to all kinds of problems. Your manager will invariably take on increasing risk knowing that it is one of the few ways he or she can exceed their target. You or your financial advisor tend to use this outperformance as proof of superior management instead of what it really is, just higher risk.
2011-07-26 Comfort is Rarely Rewarded; Maverick Risk and False Benchmarks by J.J. Abodeely, CFA, CAIA (Article)
Conventional investment strategies, while affording the investor at least a temporary degree of comfort, are destined to produce mediocre results. Only by distancing themselves from the ordinary approach – as Jeremy Grantham and Seth Klarman have – can asset managers achieve superior performance and truly fulfill their fiduciary duties by acting as proper stewards of their clients’ capital.
2011-07-15 ProVise Bullets by Ray Ferrara of ProVise Management Group
With all the conversation about healthcare reform, sometimes we lose focus on what law is currently in effect. For those with Health Savings Accounts (HSAs), the annual cap on deductible contributions will be slightly higher in 2012, going to $6,250 for an individual with family coverage and to $3,100 for those insuring a single life. Anyone born prior to 1958 can put in an extra $1,000. On the other side of the equation, the limit on out-of-pocket costs for deductions, co-payments, etc., will rise to $12,100 for family coverage and to $6,050 for individual coverage.
2011-07-07 Lessons from Investor Behavior Studies: Better to Have Patience and a Plan by Team of American Century Investments
Recent studies raise important questions about investor behavior and the likelihood that investors will successfully reach their financial targets. It seems that the best way to increase the odds of investing success is to take a balanced approach, providing exposure to the broad asset classes without leaving investors overexposed to any single area. Risk and financial reward exist in relation to one another. But diversification works on the principle that the relationship is not linear—you have the potential to get more return for each unit of risk you take by spreading out your investments.
2011-06-14 What Fama and French’s Latest Research Doesn’t Tell Us by Michael Edesess (Article)
With the high name recognition and respect that the team of Eugene Fama and Kenneth French enjoys in the world of finance, anything they publish warrants attention. Their latest offering, Size, Value, and Momentum in International Stock Returns, offers some interesting data on global equity performance. But they fail to offer any insights that explain the reasons behind their findings.
2011-06-10 Preferences Leading to Choices? by Dan Ariely of Predictably Irrational
Sometimes (perhaps even very often) we don’t make choices based on our internal preferences. Instead we have a gut feeling about what we want, and we go through a process of mental gymnastics and rationalization in order to manipulate our choices so that at the end we can get what we really want but at the same time keep the appearance (to ourselves and to others) that we are acting according to our preferences.
2011-06-07 Letters to the Editor - On the WikiLeaks of the Economics Profession by Various (Article)
This is a follow-up to last week's exchange between Guy Cumbie and Michael Edesess, which concerned Edesess' article two weeks ago, Letter to the Editor On the Wikileaks of the Economics Profession.
2011-05-17 Letter to the Editor by Various (Article)
A reader responds to our article, Howard Marks on the Human Side of Investing, which appeared last week.
2011-02-22 Toward an Understanding of Risk - Part 2 by Robert Huebscher (Article)
How should clients think about risk in their portfolios? Advisor Perspectives put that question to a cross-section of prominent advisors and academics. Their answers encompassed diverse opinions and underscored how crucial that question is to the investment process. In part one of this series, which appeared last week, we heard from seven practitioners in the financial planning community. This week, we hear from seven well-known academics, including two Nobel Prize winners.
2011-02-15 David Laibson on the Hidden Challenges of Aging Clients - Videos by Dan Richards (Article)
In this interview, Harvard economist David Laibson discusses his research into the challenges of helping elderly clients with their financial planning. He also discusses how to overcome the procrastination and laziness that often result in inferior investment decisions. This is a video of the interview.
2011-01-25 How Emotions Undermine Your Investing Decisions - Video by Dan Richards (Article)
In this interview, U.C. Davis professor Brad Barber discusses his latest research, which examines how investors' behavioral biases lead to costly mistakes. This is a video of the interview.
2011-01-15 Reminding Kids by Dan Ariely of Predictably Irrational
It is often hard to remember to take medication, especially when you hardly feel the severity of the illness or the relief of the medication. On the other hand, no one forgets to take heartburn medication – you’ll probably sprint for it as soon as heartburn begins to set in.
2010-12-06 Behavioral Finance by Charles Lieberman of Advisors Capital Management
Why do investors always do the opposite of what they should do? Individuals tend to chase performance, following recent trends until they go over the edge of the cliff. They always fight the last war. It is a proven prescription for investment disaster. So, of course, they're at it yet again.
2010-11-30 Why Bubbles Inflate and How to Avoid Them by Robert Huebscher (Article)
In this interview, Meir Statman discusses the psychological underpinnings behind the creation of bubbles in the financial markets, why some bubbles are good and others are not, and how investors should frame their decisions when facing a potential bubble.
2010-11-30 Bond "Bubble" Fears Overblown by Team of American Century Investments
In this paper, we consider the argument that there is a bond “bubble” in the context of current economic and market conditions. We examine academic literature for commonly accepted characteristics of speculative bubbles, finding little evidence to support the notion that the bond market is currently experiencing a “bubble.”
2010-11-10 The Power of Free Tattoos by Dan Ariely of Predictably Irrational
In many past experiments we have shown that people are often overly excited about Free (see Predictably Irrational). An interesting opportunity to further look at this behavior presented itself when a few weeks ago nightclub in New York City promoted an event with “free tattoos,” and we just had to check it out, and see if the offer for free tattoos would tempt people to get one…
2010-11-09 A Reading List for 2010 by Vitaliy Katsenelson (Article)
Updated for 2010 and in time for the holidays, here is the latest installment of my recommended books. I originally wrote this list in 2008 and again last year. I intend to keep adding to and revising it every year. It contains seven sections: Selling, Think Like an Investor, Behavioral Investing, Economics, Stock Market History, Risk and Books for the Soul. The first three sections are presented below and the remaining four will be presented next week.
2010-11-02 'Bubble' Bashing Does Not Imply a Risk-Free Bond Outlook by Team of American Century Investments
The present bond environment still doesn't fit previous 'bubble' profiles. We are, however, in a period of historically low interest rates and Treasury bond yields, with more room to rise than fall. Future bond price declines are a realistic expectation, but these declines are unlikely to rival other post-bubble, extended price plunges. Bonds continue to provide a cushion for equity exposure in diversified portfolios and a source of steady income for those who need it.
2010-10-29 Cliff Asness: Understanding Managed Futures by Robert Huebscher (Article)
In a portfolio with equities and fixed income, managed futures offer strong diversification value and high returns, according to Cliff Asness. Asness is the founder and Managing Principal of AQR Capital Management, a provider of managed futures products.
2010-10-26 An Exceptional Resource for Asset Allocation by Michael Edesess (Article)
Roger C. Gibson's fine and exemplary book, Asset Allocation: Balancing Financial Risk, Fourth Edition, shows that character and conscience-based counseling still exist, even in the financial profession. It is still possible for advisors to look out for their clients' long-term interests.
2010-10-19 'Bond Bubble' Fears Overblown by G. David MacEwen (Article)
Despite considerable debate in the financial media about the existence of a bond market "bubble," the fixed income team at American Century Investments finds little evidence to support this claim. None of the factors traditionally associated with asset bubbles are at work in the bond market. However, a confluence of economic headwinds argues for a prolonged period of low interest rates and inflation, while behavioral finance trends favor further bond inflows.
2010-09-21 The One-Sided Fallacy by Richard E. Cripps, CFA (Article)
The current tenor of political debate has amplified one-sided arguments as each party attempts to sell their view to voters. The same polarization has become evident in approaches to investment, and market bears are exhibiting all the classic symptoms of confirmation bias. But we know better than to let these slanted arguments sway our market convictions. As Richard Cripps explains in this guest contribution, there are plenty of reasons to remain invested in equities.
2010-09-14 Latest Bond 'Bubble' Fears are Overblown by Team of American Century Investments
Despite considerable discussion in the financial media about the existence of a bond market bubble, the fixed-income team at American Century Investments finds little evidence to support this claim. Bond bubble proponents base their argument largely on record flows into fixed-income investments, bonds' extended outperformance over stocks, and record low interest rates. However, a confluence of economic headwinds argues for a prolonged period of low interest rates and inflation, while investor demographic and behavioral finance trends also appear to favor further bond inflows.
2010-09-10 Sex and Smart Phones by Dan Ariely of Predictably Irrational
Popular online dating site OkCupid recently released some numbers users reported regarding their sex lives. One interesting correlation was between smart phone usage and number of sexual partners. Female iPhone users (at the age of 30) report having had 12.3 sexual partners, more than twice as many as women Android users. Male smart phone users show a similar jump: from 6.0 sexual partners on Android to 10 on the iPhone. A casual observer might infer a correlation between iPhone usage and sexual activity, but Ariely suggests another way to interpret the data.
2010-08-24 What Investors Really Want by Robert Huebscher (Article)
Using a mean-variance optimizer to construct a retirement portfolio that sits on the efficient frontier is tantamount to dining on a well-prepared meal that was pureed in a blender, believes Meir Statman, a professor of finance at Santa Clara University. Statman's research focuses on behavioral finance, and how advisors can help investors make smarter decisions.
2010-08-24 Should I Stay or Should I Go Now? by Mariko Gordon (Article)
As a portfolio manager it is important to know when to call it quits and how to "cut your losses". Daruma's Mariko Gordon explains why, and offers four lessons for cutting your losses in life.
2010-08-02 How We View People with Medical Labels by Dan Ariely of Predictably Irrational
In a recent online study, Dan Ariely asked participants to view a potentially funny video involving an individual who would seem to have 'issues.' Participants who were told that the girl had suffered from OCD since childhood thought she seemed more likeable, intelligent, and creative than those who were not told. But participants who were told of the girl's illness also thought that she seemed like a bigger loner and more antisocial. What this suggests is that giving individuals a disorder-label causes others viewing them to place the blame on the disorder and not on the person.
2010-07-27 Important New Research Talking to Seniors About Risk and Market Volatility by Dan Richards (Article)
New research shows how to talk to seniors about their investments. Titled "Behavioral finance and the post-retirement crisis" and released in May, this report compiles findings on how older investors perceive risk and make financial decisions. Dan Richards discusses the findings.
2010-07-26 Who Cheats More? by Dan Ariely of Predictably Irrational
Dan Ariely provides a video of a short talk on cheating he gave on July 7 in San Francisco. While most people think that citizens of other countries cheat more than Americans do, Ariely's research has found that people from Israel, Italy, China and the U.S. all cheat about the same amount. Ariely has also found that bankers cheat twice as often as politicians do.
2010-07-20 Behavioral Finance Lesson - Frequent Flier Points? by Dan Ariely of Predictably Irrational
'Medium maximization' is when people focus on near-term concrete goals (such as frequent flyer miles), and while trying to maximize these immediate and clear goals forget or discount the real reason for their actions, such as maximizing their financial outcomes. Why do people engage in medium maximizations? Because they are easy. They give people a clear direction for behavior. Just having something measurable within reach can redirect our motivation, while having such immediate and concrete goals give us a sense of progress.
2010-07-13 Cage Match by Jeffrey Bronchick of Reed, Conner & Birdwell
Contrary to public opinion, there is enormous opportunity for an investor today to focus on the business and valuation details of a particular investment while everyone else is running around trying to tie the world together into some neatly gift-wrapped strategy that can be easily quantified and traded by a computer algorithm. Yes, it can be frustrating when everything seems to go down on a day when the market goes down, but no one said this is easy. And when it gets that easy, you should be selling into it.
2010-05-25 Sleeping with the Enemy by John W. Pfenenger II, CFA (Article)
When it comes to investing, our worst enemy may be the one we see in the mirror every morning - ourselves. In this guest contribution, John Pfenenger looks at how emotions affect investment decisions, and how understanding behavioral economics can help advisors work with their clients.
2010-05-04 Four Words of Advice from a Top Advisor by Dan Richards (Article)
Last summer, Dan Richards talked to a thirty-year veteran of the business who's consistently ranked as a top advisor. The week before, he'd talked to a group of rookies just entering the business. In the question and answer period, he was been asked about the single most important thing he learned over the course of his career.
2010-04-27 Investing Insights from Doctors by Dan Richards (Article)
Dan Richards works out in the early mornings with a psychiatrist, who recently forwarded an article in the New York Review of Books by Jerome Groopman, a physician and frequent writer on the challenges of modern day medicine. As Dan read it, he was struck by the parallels between the things that cause doctors and investors to go wrong.
2010-04-20 A Simple Step to Get More from Your Day by Dan Richards (Article)
Many advisors struggle to get everything done that needs doing. If you're in that category, consider following the example of one successful advisor Dan Richards talked to recently ... and put a dollar value on every hour of your time.
2010-04-14 The Tao Jones by Tom Brakke of The Research Puzzle
Looking to step back from the market and get some inspiration, on Monday Tom Brakke reread 1983's The Tao Jones Averages by Bennett Goodspeed. As the book notes, our challenge as investors is to recognize the messages that we are being given by others, the belief systems that we rest our actions upon, and not just the type of environment that we are in now but how it is changing. Our methods and our minds are resistant to change. If nothing else, reading a book like this forces you to consider the possibility that you aren't seeing the complete picture.
2010-04-13 Today’s Number One Way to Demonstrate Your Value by Dan Richards (Article)
Advisors provide the greatest value by being an emotional anchor for clients- keeping the highs from being too high during times of untrammeled optimism, such as we saw in 2000, and the lows from being too low during periods of absolute pessimism, such as we saw a year ago and in many cases still see today. Playing that role takes more than just having an opinion - you need credible evidence to back you up, which Dan Richards offers.
2010-04-06 Do Not Give Up on Stocks: Stay Active by Jay Feeney of Robeco Investment Management
Stocks clearly have much better fundamental earnings support now than they did in mid-2009, when profits were still in a downward spiral. Money, however, is flooding away from active strategies and into passive indexing and ETFs. At this juncture, the headwinds against expansion are considerable and this stacks the balance of risk in favor of active stock-picking strategies that maintain a strong valuation bias. Higher-quality large cap stocks should also be emphasized, since the rally off the bottom has favored lower quality names, leaving the larger names with more attractive upside.
2010-04-06 A Q1 Letter to Send Clients by Dan Richards (Article)
Dan Richards provides the latest in his very popular series of quarterly letters for advisors to send to their clients. This Q1 2010 article combines the attributes he considers essential: a balanced outlook, candor, short enough for clients to get through yet long enough to be substantial, fact-based, and customizable to your own voice.
2010-04-06 Emerging Markets: High Growth does not mean High Returns by Dan Richards (Article)
Recent research explores the return payoff of investing in emerging markets such as Brazil, Russia, India and China, writes Dan Richards. Contrary to popular beliefs, investing in high-growth emerging markets has produced inferior returns to those obtained from slower growth economies.
2010-04-05 Creating God in our Own Image by Dan Ariely of Predictably Irrational
Past studies have shown that when we reason about other people, we form an opinion of their views based on two sources: egocentric info - what we ourselves believe - and outside clues - what the other person has said and done, and what others have said about them. In one recent study, researchers found that there was a significant correlation between participants' views on moral issues and their estimates of God's views on the same topics. These results may suggest that God may be a blank slate onto which we project anything we choose.
2010-03-30 Surprising New Research on Diversification from Emerging Markets by Dan Richards (Article)
Historically there have been two reasons to invest in emerging markets: the promise of higher returns that come with faster growing economies, albeit with greater volatility, and the prospect that emerging markets will offer diversification from the performance of stocks in developed economies. Dan Richards reports that new research into the impact of global diversification, though, has produced some surprising results.
2010-03-24 competitive yoga by tom brakke of the research puzzle
Investing, like Yoga, is not a competitive sport. Human nature, however, compels us to measure our investment performance relative to external, often irrelevant standards. The relative performance structure of institutional money management is the largest such example, causing investors large and small to make bad decisions in the guise of good ones. The biggest mistake a retiree with $5 million can make is to judge his investment performance relative to the S&P 500. Investing should be an intensely personal activity. We should learn from others without measuring ourselves by them.
2010-03-23 The Best Books on Passive Investing by Indudeep Chhachhi & Edward R. Wolfe (Article)
Two finance professors, Edward Wolfe and Indu Chhachhi, survey the literature on passive investing and offer their recommendations for authors and books. Whichever side of the active-passive debate you take, these books should be required reading. The evolution through which the literature on passive investing has gone is striking. Early writers started out with a point to prove: that passive investing is the only way to invest that makes sense. Today, the writing in this area has moved beyond "proving a point" to expanding on what is a settled issue.
2010-03-23 Hard Lessons from a Lost Account by Dan Richards (Article)
A couple of weeks ago Dan Richards talked to an investor who had recently switched advisors - and who provided an example of the stress that investors experience when they're not sure whether their advisor is really on top of their financial affairs. "What I look for are people who are proactive and are always thinking about my situation so that I don't have to," an investor told Richards. "That's what I look for in my accountant, that's what I look for in my lawyer - and that's what I look for in my financial advisor."
2010-03-16 How a Small Change Made a Big Difference by Dan Richards (Article)
Dan Richards says that when advisors think about ways to drive their business forward, they often look for dramatic initiatives that hit the ball out of the park. Sometimes, though, it is a seemingly mundane change to your routine that delivers the biggest successes. We also have a link to a webcast of this article.
2010-03-15 The Power of Defaults in How We Eat by Dan Ariely of Predictably Irrational
At a 2009 conference held by the American Council for an Energy-Efficient Economy, event planners decided to set the vegetarian lunch as the default meal option. Eighty percent of guests opted for the vegetarian option, compared to just 20 percent in 2007.
2010-03-09 Lesson\'s from an Investing Time Machine by Dan Richards (Article)
Time travel is every investor's fantasy - imagine if you could go back forty years and make investment decisions, knowing then what you know now. That's precisely the opportunity that Dan Richards gave a group of investors one recent evening.
2010-03-02 Nine Essential Lessons from Olympians by Dan Richards (Article)
For the past two weeks, the world's eyes were on the Winter Olympics in Vancouver, focusing on those athletes who excelled, pulling away from the pack with multiple medals. Watching the Olympics, however, isn't just about athletes achieving their goals. As Dan Richards writes, financial advisors looking for guidance on hitting their own goals can take away nine important lessons.
2010-03-01 Squash and Short-term Thinking by Dan Ariely of Predictably Irrational
Exhaustion or stress can cause people to focus only on the short term and avoid the long term, and this can make them more susceptible to mistakes. Squash is a game of strategy. Players must plan several shots ahead in order to score. When squash players are out of shape, however, they tend to focus only on making the next shot.
2010-02-23 Rethinking the Fundamentals of Client Communication by Dan Richards (Article)
Dan Richards says advisors need to fundamentally rethink both the information they communicate and - just as importantly - how they communicate. Changing these two key dimensions of your communication strategy - what you send clients and how you send it - will be critical to future success.
2010-02-23 Jason Zweig on Protecting your Wealth by David Raileanu (Article)
Jason Zweig is a senior writer and columnist for Money magazine and frequently writes for the Wall Street Journal. In this interview, he discusses strategies for protecting client wealth, proper asset allocation, and the role of advisors in a fiduciary relationship.
2010-02-16 Seven Steps to Making 2010 a Breakthrough Year for your Business by Dan Richards (Article)
Dan Richards says many advisors started the year full of enthusiasm and ambitious objectives, yet at the end of January felt bogged down and out of steam. Despite starting with good intentions, the difficulty is that we quickly get caught up in the day-to-day demands on our time, and Richards offers a seven-step plan to overcome this inertia.
2010-02-16 How Professionals Select Investments by Adam Jared Apt (Article)
In this guest contribution intended for the educated layman, advisor Adam Apt discusses the process by which investment managers select individual securities, contrasting the disciplines of fundamental and technical analysis.
2010-02-10 My Take on the NY Times Pay Wall by Dan Ariely of Predictably Irrational
Dan Ariely says the New York Times may be able to succeed with its new online pay wall if it offers subscribers a new experience that was not available before. Online Times readers will be guided by “anchoring,” which suggests that they will not be willing to pay more for the same things, but may be willing to pay more for different things.
2010-02-09 The China Conundrum by Dan Richards (Article)
Few issues divide investors today more than the investment merits of China, despite that country's tremendous potential. China's strong economic performance through the global financial crisis has reinforced this divide. Dan Richards looks at the cases for and against investment in China, and offers his own opinion.
2010-02-09 Overconfidence and Excessive Trading Harm Investor Returns by Dan Richards (Article)
The question Terrance Odean asks is if someone sells a stock and then buys another stock, on average does the stock they bought outperform the one they sold by enough to cover their trading costs? Odean, a professor at Berkeley, has researched this question and the role of excessive trading and overconfidence in investor decisions.
2010-02-02 A Question that Motivates HNW Prospects by Dan Richards (Article)
Dan Richards was asked whether he has any insights as to some great questions or strategies to get HNW prospects' attention and ultimately recruit them as clients. He provides the answer.
2010-02-01 Spending Money by Dan Ariely of Predictably Irrational
Ariely asks his readers how they would spend $20,000 if their goal was “to get the most joy and happiness.” You can view the responses.
2010-01-26 Punctuated Equilibrium by Dan Richards (Article)
Dan Richards says we're dealing with a more fundamental issue than the recent market turmoil. "We're going through one of those rare periods of ground-shaking change that have taken place throughout history, something that was in the works well before last fall's market excitement," he says, and explains how advisors should deal with more demanding customers, new technology and global competition.
2010-01-19 Ten Tips to be More Likeable by Dan Richards (Article)
When Dan Richards ask advisors about what it takes to attract and retain clients, they give him answers like above average returns, preserving capital in tough markets and strong communication. Those are all true - to these can be added delivering strong value and having clients trust your competence and integrity. One other factor is often overlooked, however - and that's likeability.
2010-01-19 Letters to the Editor by Various (Article)
Readers responded to a range of topics in our letters to the Editor: our Paul Krugman interview, our article last week on the causes of the financial crisis, our article on the true cost of insuring the uninsured, and our article on costless collars using options.
2010-01-12 Competing for Referrals by Dan Richards (Article)
In past articles, Dan Richards has discussed how to get prospects off-the-fence when they are thinking about leaving their advisor - by providing concrete proof as to why they would be better off with us than where they are now. Now, Dan provides a strategy to use when you are competing with other advisors for referral business.
2010-01-09 The Same Old Bear: A Study of Bear Markets and Stock Returns Since 1926 by Patrick O'Shaughnessy of O'Shaughnessy Asset Management
2010-01-06 Psychology of why investors 'Buy High/Sell Low,' and how to avoid that trap! by David Edwards of Heron Financial Group
2010-01-05 A Lesson from Lawrence of Arabia by Dan Richards (Article)
Everyone has a favorite movie scene, and Dan Richards' comes from his all-time favorite movie, Lawrence of Arabia. Dan explains how the lessons from that classic movie apply to the advisory profession.
2009-12-29 The Best Way to Thank Clients for Referrals by Dan Richards (Article)
What's the best way to say thank you when you get a new client as a result of a referral from someone with whom you already work? Dan Richards says sending the typical thank you gift is a mistake, and offers some advice for gifts that will make a lasting impact.
2009-12-22 Six Words that Open the Door to Accountant Referrals by Dan Richards (Article)
Put together a list of the things that frustrate advisors targeting high-end clients and roadblocks to referrals from accountants are sure to be close to the top. Successful advisors recognize the power of a recommendation from a HNW prospect's most trusted advisor, and Dan Richards reveals the six words that facilitate those referrals.
2009-12-15 A Template for a Year-end Letter by Dan Richards (Article)
Many advisors have told Dan Richards they receive a positive response from the quarterly review letters they've sent over the past year based on the templates he has provided. Here's a template that can be a starting point for a year-end review letter.
2009-12-08 Cleaning up Messes by Dan Richards (Article)
Whether it's a phone call to a difficult client, a meeting with a retiree whose portfolio has been hit hard, a tough conversation with an underperforming staff member or getting through a mountain of filing, most of us have at least one issue on which we have been procrastinating for weeks, months, maybe even years. Dan Richards gives some tips for dealing with tough issues.
2009-12-01 Avoiding the Black Hole of Business Planning by Dan Richards (Article)
This month, many advisors are working on next year's business plans. For many, those plans will end up like a black hole in space - lots of energy will go in and little or nothing will come out. Dan Richards shows how to avoid getting sucked into this black hole.
2009-11-24 Tapping into Today’s Number One Client Concern by Dan Richards (Article)
Larry Porcelli, the head of the private client group for US fund giant BlackRock said that their research shows that 70% of Americans are willing to move their accounts if another firm or advisor offered expertise on constructing portfolios to avoid running out of money. Dan Richards identifies two things advisors need to do to capitalize on this opportunity.
2009-11-17 Client Gifts that Stand Out by Dan Richards (Article)
Having trouble with ideas for holiday gifts for your clients? Dan Richards offers four strategies for selecting a gift with a meaningful impact.
2009-11-10 Investment Viewpoints - September 2009: Four Reasons to Emphasize Active Investment Management by Enrique Chang and Scott Wittman (Article)
Since the onset of the global financial crisis, there has been an increasing number of articles in financial journals and the financial press pointing out that actively managed investments of all types did not fare well relative to passive investment strategies. In this article, American Century Investments provides four fundamental reasons why those who have forecast the demise of active investment management are mistaken, in part due to one of the most common errors of behavioral finance-the Recency Effect. We thank them for their sponsorship.
2009-11-10 Using Case Studies to Make Your Case by Dan Richards (Article)
Case studies rank as one of the most effective ways to tell your story to prospects. As Dan Richards writes, well-written case studies can be more persuasive and memorable than the typical marketing material which advisors use with prospects.
2009-11-03 Five Steps to an Effective Portfolio Review by Dan Richards (Article)
Even with the recovery in markets since March, given client losses in the last two years this can still be a tough time to conduct portfolio reviews. Dan Richards provides a five-step approach to effectively conducting those reviews.
2009-10-27 The Power of Proactive Client Calls by Dan Richards (Article)
Dan Richards often asks advisors how many proactive calls they make to clients in the average day. The most common response is one or two ... and often the answer is zero. Many advisors underestimate the impact of proactive calls on clients.
2009-10-20 Three Ways to Inspire Clients by Dan Richards (Article)
Given the beating their portfolios have taken and the general mood of skepticism, often your goal when meeting with clients is to have them leave feeling more optimistic and upbeat about their future prospects and in particular about your role as their advisor. Dan Richards offers three ways to uplift your clients' spirits, while confronting today's crucial issues and building your credibility.
2009-10-13 Work Smart by Building Thinking Time into Your Day by Dan Richards (Article)
Consistently committing the time to think critically can lead to a dramatic boost in overall productivity. So how do we go about ensuring we're "working smart"? Dan Richards offers five opportunities to build thinking time into your business - you can do this annually, quarterly, monthly, weekly ... or even daily.
2009-10-06 A Quarter-End Letter to Send Clients by Dan Richards (Article)
Last fall, Dan Richards began posting quarter-end letters that advisors could adapt for their own use. Many advisors have told him that they have received an outstanding response to the letters they sent as a result, and Dan provides a template for a third-quarter letter.
2009-09-29 Turning Intention into Action by Dan Richards (Article)
Dan Richards' recent article, A Wakeup Call for Advisors: Turmoil at the Top of the Market, drew by far the largest response of any his articles in the last year and a half. Focusing on a number of recent articles on affluent investors leaving existing advisors, the article laid out five strategies to respond to this trend. Of course, laying out the strategies is the easy part - it's acting on them that's tough - and Dan offers suggestions for advisors looking for a way to prioritize their action plan.
2009-09-22 Predictably Irrational - How Investors Frame Decisions by Robert Huebscher (Article)
One of the most provocative sessions at last week's Schwab Impact conference was given by Dan Ariely, who deftly summarized his current research in the important field of behavioral finance. Ariely's message was that, no matter how good their intentions or how deep their experience, people - investors specifically - consistently make the wrong decisions. They behave irrationally, and predictably so.
2009-09-22 Communicating in a Sound Bite World by Dan Richards (Article)
Advisors today operate in a very different world from twenty years ago. Dan Richards discusses one of the most significant changes - the shortening of attention spans - and the resulting shift in what it takes to communicate effectively.
2009-09-15 Investing Lessons from Golf and Blackjack Players by Robert Huebscher (Article)
At key moments investors refuse to take those chances that will make them money. Behavioral finance has a term for this - risk intolerance. Research supporting these claims comes from two divergent pastimes - the games of golf and blackjack.
2009-09-15 Practical Advice for Students Entering University by Dan Richards (Article)
If you have clients with children heading off to college or university this fall, consider emailing these tips which Dan Richards provides, both for them to read and perhaps to pass on to their children. Chances are those tips will be particularly appreciated where kids are leaving home and living on their own.
2009-09-08 Tapping into Your Prospect’s Hot Buttons by Dan Richards (Article)
Experienced advisors know the importance of identifying and responding to the emotions that drive client's and prospect's behavior - and tailoring the way they interact with each individual's hot buttons. Dan Richards discusses how you can simplify your clients' lives with respect to communication, and provide a valuable service at the same time.
2009-09-01 Listening for the ECHO in Client Calls by Dan Richards (Article)
In the course of a typical week, all advisors and their support teams have lots of routine telephone interactions with clients. At a recent roundtable for advisors, a top producing advisor told Dan Richards about a simple step he'd implemented that significantly increased the mileage from those calls.
2009-08-25 The Case for Optimism by Dan Richards (Article)
Only a few months ago, economist's doomsday scenarios caused widespread concerns that we were about to revisit the Great Depression. That consensus view on the economy has shifted remarkably quickly, with a much more positive outlook for the immediate period ahead. Dan Richards cites two recent articles making a persuasive case for optimism.
2009-08-18 An Alternative Way to Conduct Client Reviews by Dan Richards (Article)
Experienced advisors know there's no substitute for face-to-face meetings to review portfolios, especially in times such as these. In some cases, however, a client's location or schedule make it impossible to meet face-to-face - in those cases, Dan Richards offers an alternative method to conduct that review.
2009-08-11 Behavioral Finance Traps En Route to Investment Success by Dan Richards (Article)
To understand why investors fail to stick to their plans, economists and academics are studying the rapidly growing field of "behavioral finance," analyzing the patterns of behavior that cost investors serious money. Dan Richards looks at the current research and its implications for investors and advisors.
2009-08-04 Letters to the Editor by Various (Article)
In our letters to the Editor, readers respond to last week's article, How Long is the Long Run?, Geoff Considine's article, The Retirement Portfolio Showdown: Jeremy Siegel v. Zvi Bodie , and Ted Wong's article, Moving Average: Holy Grail or Fairy Tale - Part 3.
2009-07-14 Behavioral Finance – A Three-Part Model for Client Relationships by Susan B. Weiner, CFA (Article)
Behavioral finance can improve your client relationships during market turmoil, if you recognize your clients' emotional right-brained reactions before you offer insights based on your analytical left-brained analysis. By applying a three-pronged process of Recognize-Reflect-Respond, you can adapt to new information in a thoughtful and effective framework.
2009-07-07 Burton Malkiel Talks the Random Walk by Robert Huebscher (Article)
Passive investing has no more outspoken advocate than Burton Malkiel. At age 72, Malkiel remains every bit as committed to the efficient market hypothesis as when he wrote A Random Walk Down Wall Street in 1973. Malkiel, who has taught finance at Princeton for the last 20 years, was a featured speaker at the Forbes Advisor Conference last week. He insists that investors should buy and hold index funds and defended his position against a series of challenges put to him.
2009-06-16 Peter L. Bernstein Remembered by Robert Huebscher (Article)
The investment industry lost one of its leaders last week, when Peter L. Bernstein passed away at the age of 90. As an author, Bernstein provided clarity and insight to our understanding of risk and the way markets operate, through his books and his newsletter, Economics and Portfolio Strategy. We are republishing our interview with him last January, when he foresaw many of the elements of the current crisis.
2009-02-03 How to Think about Investing by Adam Jared Apt (Article)
Adam Jared Apt's column answers the question "how to think about investing" from the perspective of an educated laymen. Apt traces the development of classical finance, modern portfolio theory, and behavioral finance, and shows the role each plays in the construction of a properly diversified portfolio.
