Complacency will get you into trouble, at least in the financial markets. Back in February, when the U.S. stock market dropped almost 3.5% in one day (following an 8% plunge in the Chinese market), investors became alarmed, newspapers ran front-page headlines for several days, and television “experts” opined about the market’s sudden volatility. It wasn’t the market that had suddenly […]
General
Financial gurus can be too simplistic
Best-selling author Suze Orman has become a veritable guru to women (and many men) who want to get a handle on their finances. Through her books, television shows, and personal appearances, Orman has preached a philosophy of financial responsibility and debt reduction. There is no question that her basic message is helpful and important to the many Americans who find […]
In the stock market as in horse racing, go with the odds
Predicting the stock market is like handicapping the horses: you can pull in and analyze lots of variables, but in the end it’s better to go with the odds. Bettors at the track look at a horse’s lineage, recent races, jockey, performance in similar weather, and hundreds of other variables. In the end, however, the results of that particular race […]
The richest control even more of the world’s wealth
The continuing concentration of wealth recently has caused even President Bush to lecture the New York Stock Exchange about the dangers of income inequality. In the United States back in the 1960s, the top 1% of households had a net worth that was 125 times greater than the average household net worth. Today, the net worth of wealthy households is […]
The baby boom retirement wave may not punish the stock market
The largest generation in U.S. history is getting ready to retire, prompting dire predictions of a stock market bust. Some market observers worry that baby boomers will sell off large amounts of financial assets to fund their retirements, while smaller generations that follow the boomers will not be able to purchase those assets. The scariest predictions say the sell-off will […]
How to avoid seven big cognitive biases
Human beings seem to come ready-equipped with cognitive biases related to their perceptual equipment and adaptations to the world throughout evolution. Investors who want to do better in the markets and feel better about what they are doing must learn to recognize these states of mind. Here is a summary of the major biases covered in previous articles in this […]
Treat television financial ‘experts’ with caution
Paul Kangas, host of the Nightly Business Report, was interviewing New York City investment adviser Todd Eberhard in December 2001: Kangas: “What should we be buying?” Eberhard: “Well, we’re looking at some stocks which are coming out with very good numbers… right now. Examples would be a General Electric, which is trading at about $41 a share.” Kangas: “And also […]
Consumers face an alarming credit card crisis
In 1949 a New York businessman who was dining out was about to pay for his meal but was embarrassed to find he had left his wallet at home. The next year he started Diners Club, which allowed wealthy New Yorkers to pay for meals on credit with a cardboard card. Thus the credit card was born. It took another […]
Protect your financial identity and avoid theft
In this day and age of computers and credit cards and information databases, it is almost becoming a question of when, not whether, you will become a victim of identity theft. The Federal Trade Commission says 27.3 million Americans were victims of identity thieves in the five years through 2003. “For several years we have been seeing anecdotal evidence that […]
New market definitions
Bad times usually bring out gallows humor, and the recent bear market was no exception. Various versions of funny Wall Street definitions have appeared on the Internet and in print publications. Here are a few: Market correction: The day after you buy stocks. Broker: What your broker has made you. Standard & Poor: Your life in a nutshell. Value investing: The art of buying […]
