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There Are Four Dimensions To Investing (Advisor Perspectives)
Jerry Wagner of Flexible Plan Investments argues that passive investing – the buy-and-hold strategy – is one-dimensional investing because “holding is not a word of action.” Most investors are two-dimensional investors in that they buy and sell. But he writes that there are more dimensions to investing.
“While passive investors often focus only on the state of the investment itself in one dimension, i.e., the factors about the investment that caused them to buy in the first place, active investors view investing in at least two dimensions. They focus on both buy and sell factors. They care whether the market environment and/or economy in general are favourable or unfavorable for stock investment as well.
“Still, they differ further. Some buy and hold a long time, while others buy and hold for a short time. Two dimensional investing, then, is like a line. And that line can be long or short.
“Dynamic, risk managed investing, is like a cube. It’s three dimensional. It has width, length and depth … Finally, think of each of those dynamic, risk managed investing cubes, those separate strategies, as bricks. Combine them and you have the safety of a home. Together, strategically diversified, dynamic, risk managed, investing, like your home, is intended to weather the fourth dimension – time.”
Markets May Still Be Undervalued (Howard Lindzon via Barry Ritholtz)
Howard Lindzon writes that the Internet is “gathering momentum in year 20 with the global, mobile web …The internet has of course broken down old industries and exploded new ones onto the scene. My gut is the next 10 years will see more of the same but also more of a melding of everything and unique new business models both niche and scalable.”
He points us to Jason Calacanis’ chart and says, “another spike is out there, especially in the loose global monetary world we live in today.”
The Financial Industry Regulatory Authority (FINRA) has fined three brokerages, Atlas One Financial Group LLC, Firstrade Securities Inc, and World Trade Financial Corp. $300,000. The brokerages were fined for not putting in place programs to prevent money laundering. Four executives were also fined and suspended.
Whitney Tilson: The Three Most Dangerous Words In Investing (Business Insider)
In his presentation for the Value Investing Congress in Las Vegas, Whitney Tilson revealed the three most dangerous words in investing: “I missed it.”
“The ‘I missed it’ phenomenon is the emotional mistake of looking into a stock that’s moved up a lot and, sometimes subconsciously, saying to yourself, ‘Rats, I missed it’ and doing no further work on it. I know people who looked at Berkshire Hathaway, after it had run from $100 to $1,000 (and $1,000, to $10,000, and $10,000 to $100,000) who fell into this trap …
“Therefore, anytime you hear yourself saying ‘I missed it,’ STOP! Re-do your work, ignore the historical price, and focus on the only question that matters: is the stock at today’s price, an exceptionally attractive investment? If so, BUY IT!”
A survey from Fidelity suggests that firms that want to hire away advisors that are undecided about joining them, should try to “woo” the advisor’s spouse as well. The study showed that for 40% of those that switched firms, family members had encouraged the move.
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