The fear of flying is different than the risk of flying. The fear of flying is an anxiety disorder whose source often has little or nothing to do with the actual risk associated with flight. Statistically, flying is much safer than driving a car. If you want to live longer – when you travel, fly more and drive less. My thesis is that many people have difficulty investing in the stock market because they suffer an anxiety similar to the fear of flying. It’s a fear that something bad will happen that has a very low probability of happening. Statistically, investing in stocks is very safe in the long term.
I recently had the opportunity to interview Steve LeCompte, founder of CXO Advisory Group LLC and editor of CXOadvisory.com. His company can best be described as an investment-strategy-testing firm. Steve applies rigorous, scientific testing methods to investment strategies of all types and reports on the viability of those strategies in his blog. He has tested nearly 1,000 strategies during his career, all of which are available to subscribers for a modest annual subscription fee. The firm does not offer a portfolio management service or provide personalized financial advice.
Nearly every financial adviser will tell you that foreign stocks should be part of a well-diversified portfolio. Yet, an analysis of the data shows that non-US (foreign) stocks as an asset class have underperformed the US market by a meaningful amount for more than 40 years, in addition to having higher risk. So, why do it?
There are many things for index fund investors to be thankful for. Here is a short list of thanks for index fund investors to remember when they’re sitting around the Thanksgiving Day table enjoying some of the benefits of investing wisely in index funds. 1) Jack Bogle: Vanguard Group founder and former CEO John C. [...]
Markets are not exchanges, exchanges are not indexes, and indexes are not investments. Yet, these words are often interchanged in discussions about index investing. I hope this will add some clarity to the discussion.