by The Investor
on September 22, 2009
Yesterday’s dip in the stock market was seized upon as the start of the correction everyone expects after the crazy advance of the past six months.
Yet today the market has bounced back.
This has been going on for months now. It’s the classic ‘climbing a wall of worry’ thinking of a battered generation of investors who have been recently reminded that investing in stocks is not a one-way bet.
I can’t remember ever seeing as many bearish investors about. If you go down to the woods today, the surprise would be how hard it is to get a space at the picnic.
For example, the only traffic keeping once-thriving share bulletin boards alive are posts outlining in great detail how terrible the economic outlook is — six months after the economic outlook started turning positive.
Of course, the stock market will dip again at some point. For all I know we’re in a bear market rally, and a 50% lurch lies just around the corner.
But I will tell you two things I’m sure of: [continue reading…]
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by Guest Author
on September 21, 2009
This is a guest post from Tim, author of the Psy-Fi blog, an excellent take on psychology and finance.
Behavioural finance – the study of where psychology meets finance and a car crash ensues – is now accepted as revealing how people mismanage their investments.
The behavioural finance approach offers a very different view of the world to old-fashioned efficient market theories, which reckoned that all stock prices were correct and based on rational thinking by rational investors in a rational world.
No one who’s experienced the last decade of turmoil can really believe that markets are efficient!
On the other hand, efficient market theories have the great benefit that they can be used to create so-called quantitative models. These models work for most of the time while people behave roughly rationally, and so enable investment firms to make decent amounts of money.
Unfortunately they’re also completely useless when everything goes wrong.
[continue reading…]
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by The Investor
on September 19, 2009
My weekly commentary followed by my weekend news and blog links round-up.
A quiet week on Monevator due to my short canal break hides lots going on behind the scenes.
With the days getting shorter and the crops being harvested, it’s a good time for an update on this blog and the markets.
Quick holiday report
A few readers were kind enough to ask how my holiday went. It was fantastic! Most of my worries about dad evaporated once we were on the boat, and it was me who fell into the canal, not him!
[continue reading…]
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by The Investor
on September 18, 2009
Attention all readers! Bargain alert!
Mike Piper, the author of the excellent blog and book about passive investing, Oblivious Investing, has decided to release his latest 100-page book as a free download.
Quite why Mike is doing us writers out of a job/hobby by releasing such great material for free is another matter, but from your point of view, who cares?
UK readers might get confused with Chapter Two, which is about American tax saving plans. Just substitute Mike’s talk about Roths and 401Ks for our ISAs and pensions — the main point (sheltering from tax is good) is true here too.
Don’t delay, because Mike plans to remove the free option when the book goes on sale in Amazon next month on 1st October.
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