“You have to understand, most of these people are not ready to be unplugged. And many of them are so inured – so hopelessly dependent on the system – that they will fight to protect it.” Sound familiar? That’s Morpheus explaining The Matrix to Neo in the 1999 film of the same name. But could [...]
According to a recent Wells Fargo/Gallup poll when asked if the S&P 500 index increased about 10%, 20% or 30% in 2013 only 11% of adults with at least $10,000 in savings and investments got it right. (The answer is almost 30% rising to 32% with the inclusion of reinvested dividends). This is despite the [...]
A couple of recent studies highlight the (willful?) financial ignorance of the American public: The audit confirmation service Confirmation.com polled college-educated investors about the Bernie Madoff fraud. The findings are interesting: 27% of respondents never heard of Bernie Madoff or are aware he perpetrated a stock market fraud 50% of respondents between the ages of 18 and [...]
Behavioral finance suggests the power of emotions sways and often overrules our rational, logical minds. These emotions are often (but not always) inherited from and influenced by our parents through "money scripts" - ingrained, often unconscious beliefs we hold about money. Scripts may include beliefs about wealth, poverty, budgeting, spending, saving, charitable giving, investing, protecting/insuring, [...]
We've all heard the adage "it's a marathon - not a sprint." Sadly in our instant gratification society too many of us miss the importance of the sentiment. Investors often fall victim to impatience - usually through fear of missing out or falling behind. Emotional barriers to smart behavior are real and shouldn't be minimized [...]
According to this recent report from Citi investors during the week of Feb 5th pulled record amounts of cash ($24 billion) from U.S. stock funds while putting almost $15 billion into bond funds. The S&P 500 returned 125% from its low in Mar 2009. Most investors sat on the sidelines seeing their shadows and predicting 6 more years [...]
"All the rusted signs we ignore throughout our lives...choosing the shiny ones instead." "Hello, Springfield. Sorry to divert your attention from all the big noises and shiny things." Recognize the above? One of them? Both? The first is a lyric from Pearl Jam's "Thumbing My Way." The second is The Simpsons' Sideshow Bob interrupting the crowd at the air [...]
Somewhere Elaine Garzarelli is nodding her head. The woman who as a stock analyst at Shearson Lehman famously "predicted" the Black Monday market crash of 1987 is thinking, "Finally I'm not alone." Meredith Whitney's Garzarelli-esque moment was in 2007 when she famously "predicted" the troubles at Citi. Since then she's gone on to be horribly, [...]
It's time to face a painful truth. We're human and we're flawed. We like to think we can do no wrong but it simply isn't true. Even if we're "smart" we often do dumb things. How else to explain boy bands and "reality" TV?! If we didn't listen or watch it would go away. When [...]
Think that's hyperbole? Not according to a recent survey from Nationwide Financial. In a survey of potential investors with at least $100,000 in investable assets: 83% fear another financial crisis 62% are scared of investing in the stock market 58% fear death