Bitcoin and the Power of Belief

Why Cryptocurrencies are No Different From Most Other Risky Assets Photo: Pixabay In the past few weeks, a few things have happened that have led me to do some digging on Bitcoin and why I think it is not that different from most other risky assets. For those of you that do not know what Bitcoin…

Strike While the Iron is Hot

The Role of Momentum and Timing in the Stock Market Photo: Pixabay This week I want to talk about market timing and momentum in stock prices. Though I have already described why you should just keep buying regardless of market valuations, I want to dig deeper on this point to illustrate how difficult it can be…

Having Water in the Desert

A Lesson From Warren Buffett on the Power of Liquidity Photo: Pixabay This week I want to illustrate how you can ensure your financial soundness during the next crisis by having ample liquidity. But first, let’s start with a story: “But everything was not fine. Long-Term, which had calculated with such mathematical certainty that it…

The End is Everything

Why Timing of Investment Returns Matters and What To Do About It Photo: Pexels I have previously written about how luck can influence your investment results, and this post will continue that discussion, but with some additional complexity. Not only does luck matter, but, in particular, your returns right before and in the first years of…

Risk and Reward in a New Era

How Investing Has Changed and Why Future Returns Will Likely Be Lower Photo: Pixabay This week I want to talk about how much the investing world has changed over the last century and how these changes may reduce your future expected returns. My argument is that because it is now easier, cheaper, and less risky for…

The Unknown Unknowns of Investing

When Diversification Fails and How to Prepare for the Next Crisis Photo: Wikimedia Commons There is a great line by Donald Rumsfeld about the knowledge of knowledge(paraphrasing, emphasis mine): There are known knowns; things we know we know. There are known unknowns; things we know we do not know. But there are also unknown unknowns — things we…

Bad Investment Results? Your Birth Year May Be to Blame

How Luck Influences Investment Success and What to Do About It Photo: Pixabay You likely do not remember it, but the year you were born had a larger impact on your future investment success than you can imagine. Why? Because the investment industry has a secret: Luck matters a lot more than you think And I am…

Following Your Passion is a Numbers Game

On Luck and Success in the Creative Industry Photo: Wikimedia Commons Having a creative career is like dynamite. The only thing you need to do is ignore how long the fuse is. This post is for all the people who want to make a name for themselves through writing, acting, music, art, or some other creative endeavor…

The Early Bird Gets the Return

The Real Reason Why Investing Early is Important Photo: Pixabay You have probably heard the phrase before: Start saving early. The logic goes that the earlier you start saving and investing, the more time you will have to compound your money, and the more successful you will be as an investor. I agree with this…

Fantastic Lies and How to Find Them

Detecting Fraud Using the Mathematics Behind Benford’s Law Photo: Pixabay This week’s post isn’t about personal finance, but I think you will find it intriguing. I am going to illustrate how it is possible to detect fraud in certain kinds of data using some simple math. But, before we dive into that, let’s play a…