Why Even the Greatest Investors Are Not Immune From Error Photo: SplitShire on Pixabay Harry Markowitz. The man who popularized diversification with the creation of modern portfolio theory. In 1990, he shared the Nobel Prize in Economics with William Sharpe (the creator of the Sharpe ratio) and Merton Miller (of the Modigliani–Miller theorem) for “pioneering work in…
Nick Maggiulli
Nothing Happens, Then Everything Happens
On the Fits and Starts in Markets and in Life Photo: Pixabay After traveling the world for over five years aboard the HMS Beagle, Charles Darwin returned to England on October 2, 1836. You would think that after half a decade of documenting the unknown flora and fauna of the globe Darwin would sit down…
No Laws, Only Tendencies
The Difference Between the Natural World and the Investment World Photo: Pixabay Last week I attended a live Masters in Business taping between Barry Ritholtz and the famed investor Howard Marks. During the Q&A session, an architect in the crowd asked Marks, “How do you know where you are in the market cycle without paying…
The Easiest Retirement Choice
Simplifying What Matters When Saving for Retirement Photo: Unsplash Retirement. The Nobel Laureate William Sharpe called it the “nastiest, hardest problem in finance.” And it is. Between deciding how much to save and spend throughout your life, you also have to make guesses about the future. What will inflation be? How long will I live? What…
How to Invest a Lump Sum
A Deep Dive Into Investing Large Amounts of Money Photo: Pixabay So, it happened. You just received a lot of money. Maybe a relative passed away and left you a nest egg. Maybe you sold your business. Maybe you hit the lottery. Regardless of how you got the chunk of change you are currently sitting…
The Cognitive Aristocracy
What Should We Do About the Growing Intellectual Divide? Photo: Pixabay In the year 1900, the United States had a high school graduation rate less than 10% and only half of all children aged 5-19 were enrolled in any form of schooling. Why was school enrollment so low and virtually unchanged since the 1850s? Most…
Even God Couldn’t Beat Dollar-Cost Averaging
The Problem with Buying the Dip Photo: Fabrizio Verrecchia on Unsplash This is the last article you will ever need to read on market timing. It’s a bold claim, but I’m not messing around. So strap in, because the training wheels are off on this one. To start, let’s play a game: Imagine you are dropped somewhere in…
One Big Thing
On the Power of Heuristics and Reducing Complexity Photo: Pixabay Before American Pharoah won the Triple Crown in 2015, no one expected much from the horse. Jeff Seder felt differently. Seder had worked as an analyst at Citigroup before quitting and following his passion to predict the outcome of horse races. But, Seder was different…
Fickle Fortune
On the Ebb and Flow of Luck Photo: Flickr Few people have done more to change the world and have gotten rewarded less for their efforts than Edwin Drake. On August 27, 1859, Drake became the first person in history to successfully drill for oil. Despite his early start, within a few years of his…
Beware the Gatekeeper
On the Most Powerful Cognitive Bias in the World Photo: Pixabay It was the morning of Halloween when I got her text. “What are you doing tonight?” It was Michelle (not her real name), a woman I had been dating off and on for a few months in NYC. “Nothing. What’s up?” I responded. She…
