On Time’s Role in Investing Photo: The Persistence of Memory (Salvador Dali) Recently I finished an incredible book by Alan Lightman called Einstein’s Dreams. The book describes a series of short thought experiments about worlds in which time behaves differently from our own. Naturally, I thought it would be fun to imagine how investing might…
Losing With a Winning Hand
The Nature of Underperformance and Why it Pays to Wait Photo: Pixabay It was late 1999 and Warren Buffett had experienced his worst year in a decade. While the S&P 500 was up over 20%, Berkshire Hathaway’s stock price was down 20%. Some started to believe that Buffett had lost his magic touch. An article titled…
Find What You Do
On Finding Your Purpose and the Beauty in Investing Photo: Pixabay Mark Zuckerberg was once asked what he thought of The Social Network, the film that tells the beginnings of Facebook. Mark laughed and said he was amazed at how many little things the filmmakers got perfectly right, while also getting the major plot points…
And the Crowd Goes Wild…
On the Wisdom and Madness of Crowds Photo: Pixabay When the markets fall and the streets run red, the lone wolf survives, but the pack dies. In 1906, the British scientist Francis Galton made a discovery that would forever change our knowledge about group decision making. Before his revelation, Galton was of the opinion that the future…
Know Thy Investing Self
Why I Sold All of My Gold and Won’t Look Back There is a great line that comes from George Goodman’s The Money Game (note that Goodman went by the pseudonym Adam Smith): The first thing you have to know is yourself. A man who knows himself can step outside himself and watch his own reactions…
The Cobra Effect
The Law of Unintended Consequences and the Risk of Owning Bonds Photo: Pixabay When the British occupied India under colonial rule in the mid to late nineteenth century, they had a problem — Cobras. These venomous snakes were numerous in India and, unsurprisingly, the British were not fond of them. As a result, the British government set up…
Falling Fast and Rising Slow
On the Nature of Equity Price Declines and Recoveries Photo: Pixabay This week’s post concerns something that is well known to many investors: stock prices fall quickly and recover slowly. However, my real question is: how long, on average, does it take for the decline and subsequent recovery to occur? To begin, let’s consider the…
When There is Blood in the Streets
Why Following Advice During a Financial Panic is Not as Easy as it Sounds Photo: Wikimedia Commons There is a famous quote by the 18th century banker Baron Rothschild: The time to buy is when there’s blood in the streets. Rothschild made a lot of money in the panic that followed the Battle of Waterloo using…
Cooperation in the Age of Anger
Why We Need Understanding And Support For Others Now More Than Ever Photo: Pixabay I have finally cracked. After writing for Of Dollars And Data for 33 weeks without discussing politics in the slightest, I have had enough. I really thought I could keep this website strictly to personal finance/investing, but I don’t have the will…
Retiring Off Dividends: What Are the Odds?
A Simulation of Retirement Dividend Income Using Varying Savings Rates and Time Horizons Photo: Pixabay This is a guest contribution by Nick McCullum from Sure Dividend. Sure Dividend uses The 8 Rules of Dividend Investing to systematically identify high-quality dividend stocks suitable for long-term investment. Investing in the stock market has historically been one of the…
