March 2018 Sailing with the Tides Embarking on a financial plan is like sailing around the world. The voyage won’t always go to plan, and there’ll be rough seas. But the odds of reaching your destination increase greatly if you are prepared, flexible, patient, and well-advised. Here is this week’s article from Dimensional's Jim Parker: Sailing with the Tides. SAGE Serendipity: You want to watch TV but deciding what to watch is taking more time...

Usually, our “3 Things” include – wait for it – three things. But Warren Buffett’s 2018 annual letter to Berkshire Hathaway shareholders is filled with so many interesting things that, today, we’re featuring three insights from this one source (emphasis is ours). 1.  Sleeping Well at Night “Why the purchasing frenzy [from others]? In part, it’s because the CEO job self-selects for ‘can-do’ types. If Wall Street analysts or board members urge...

We’re back! This week, we’re following up on last week’s post on how to combine practical application and academic science to impart a wholly stronger investment strategy. It’s called evidence-based investing, and we are delighted to share excerpts of a conversation between two respected proponents of the approach: The Evidence-Based Investor journalist Robin Powell and Dimensional Fund Advisors Co-CEO Gerard O’Reilly, PhD. You can read the entire interview on Powell’s blog...

There’s little we love more than a spot-on analogy to make simple sense of investment theory – like our recent “3 Things” about how the near-term market often behaves like an unruly dog on a short leash (from “A Wealth of Common Sense” blogger Ben Carlson). That said, while informational “snacks” are nice, sometimes a more complete meal is called for. If you’ve been craving an enhanced understanding of some of...

Creativity, Inc.  Author: Ed Catmull, President of Pixar Animation & Disney Animation with Amy Wallace Creativity, Inc. is a book for managers who want to lead their employees to new heights, a manual for anyone who strives for originality, and the first-ever, all-access trip into the nerve center of Pixar Animation—into the meetings, postmortems, and “Braintrust” sessions where some of the most successful films in history are made. It is, at heart,...

A "stunning" chart on inflation Barry Ritholtz shares a chart showing Inflation: Price Changes 1997 to 2017 What do you notice about the cost of college as well as health care? “Wages have barely ticked over the median inflation measure, but that did not stop some people from blaming the correction on rising wages.” Chart Source: Chart of the day (century?): Price changes 1997 to 2017 (AEIdeas, Mark J. Perry, 2/2/2018) 90-second fact-checking what you...

The market as an excitable dog on a leash 1.  One of my favorite financial bloggers, Ben Carlson, writes in Market Earthquakes: “Ralph Wanger, the eccentric portfolio manager of the Acorn Fund, once summed up the stock market to Bill Bernstein with an analogy about walking a dog: He likens the market to an excitable dog on a very long leash in New York City, darting randomly in every direction. The dog’s owner...

Recent Market Volatility February 2018 "While it may be difficult to remain calm during a substantial market decline, it is important to remember that volatility is a normal part of investing" After a period of relative calm in the markets, in recent days the increase in volatility in the stock market has resulted in renewed anxiety for many investors. From February 1–5, the US market (as measured by the Russell 3000 Index) fell...

February 2018 New Year, New Market Highs Every day stocks have a positive expected return regardless of whether markets are at an all‑time high or not. Throughout 2017, the S&P 500 Index recorded 62 new closing highs in 251 days of trading. In the first three weeks of January 2018 alone, the index crossed 10 new record closing highs in 13 days of trading. With stock indices continuing to set new highs, does...

Scary headlines resurface 1.     Writers have dusted off their dictionaries and words like "sink", "plunge", and "selloff" have reappeared in the headlines. (Say those words out loud and notice how they make you feel. Ugh. Right?) The antidote is context. As Bob French notes in his article "Putting Monday’s Drop in Perspective," "After the market’s close on Monday (and the not so great previous week), we’ve only given up our...