What Makes the Smart Money Smart

New studies show that the “so-called smart money is prone to many of the same errors as amateurs,” writes Wall Street Journalcolumnist Jason Zweig. Professional investors, he argues, “rack up high fees for results that a blindfolded chimpanzee would be ashamed of,” adding that they “hold stocks too long,” “react erratically to stock splits,” and “they may even buy one stock when they intended to purchase a different one.” Zweig cites the findings of a… Read More

Zweig: Think Before Buying Chinese Stocks

In a recent article for The Wall Street Journal, columnist Jason Zweig argues that although many U.S. investors appear to be increasing their exposure to China (hoping for high returns due to the country’s economic growth), “those hopes could end in heartache when expectations collide with reality.” Zweig points out: “History shows that countries with faster-growing economies often produce lower—not higher—stock-market returns.” Since Chinese stocks peaked in 2007, Zweig explains, they have lost an average… Read More

What Would Benjamin Graham Make of Today’s Market?

Although value stocks have lagged for a long time, an article by Wall Street Journal columnist Jason Zweig argues that the strategy’s champion, Benjamin Graham, still had the right idea. Zweig notes, “faster-growing, higher-priced stocks have outperformed by such huge margins that the long-run advantage of value stocks has withered away. Will that last? Probably not. Was Graham wrong? Almost certainly not.” The article points out three important tenets of Graham’s teachings: A stock “isn’t… Read More

A Dinner with Charlie Munger

In an article for The Wall Street Journal, columnist Jason Zweig recounted a dinner with Berkshire Hathaway vice chairman Charlie Munger. Describing Warren Buffett’s 95 year-old business partner as a man with a “superabundance of stamina, curiosity and concentration that many people a third his age would envy,” Zweig adds, “Charlie Munger is a living reminder that to be a great investor, you must be a great learner.” Here are some highlights and key insights… Read More

Individual Investors May Not Be “Dumb Money” After All

In a recent article for The Wall Street Journal, columnist Jason Zweig writes, “Bit by bit, the myth of the ‘dumb money’ is dying.” Although Wall Street has long characterized individual investors as being “ill-informed, fickle and hapless” and therefore in need of fee-based advice, Zweig argues that the claim is “nonsense” and that “new evidence of its foolishness is piling up fast.” He cites a recent study of Vanguard Group clients that shows them… Read More

Zweig on Investing and Socializing

Wall Street Journal columnist Jason Zweig reported that newly released data from Riskalyze (a California-based firm) reveals state-by-state patterns in investor risk tolerance—using responses from more than 458,000 clients of about 22,000 financial advisers (responses were scored on a scale of 20 to 90, with 20 representing the lowest tolerance). “Perhaps unsurprisingly,” wrote Zweig, “New Yorkers scored near the top, at 85,” topped only by Nebraskans (90), with residents of New Jersey, Florida, and New… Read More

Zweig and Grant on the Pressure to Go Passive

On a recent episode of WealthTrack, Consuelo Mack interviewed financial journalists Jason Zweig and James Grant regarding the lagging performance of value stocks and the pressure to move to passive investing. Here are some highlights: According to Zweig, “The real utility of a value investing framework is that it helps modulate your emotions as a value investor.” Grant argues that the current cycle is likely to end badly due to: (1) the corruption of accounting… Read More

Zweig: “Smart” Money is Bailing on U.S. Stocks

Wall Street Journal columnist Jason Zweig writes that while data shows how the S&P 500 has outperformed international stocks for years, the numbers can “play tricks on you. It still makes sense to add international stocks to a U.S. portfolio, probably more so than ever.” Zweig notes that while the numbers show that the U.S. market has dominated over the long run, it’s only because stocks have done so well in the recent past. “Lofted… Read More

Everyone Makes Mistakes, Including Warren Buffett

In last month’s Wall Street Journal, columnist Jason Zweig recently wrote, “If I had to write one sentence that is true always and everywhere, it would be this: Smart investors did stupid things again today.” Zweig outlined a series of investing mistakes, including Warren Buffett’s 1993 purchase of Dexter Shoe Co. using over 25,000 shares of Berkshire Hathaway stock. By 2007, Zweig notes, Buffett said the company was “a worthless business.” But neither Buffett nor… Read More

How Companies Fool Investors with Profits Fad

Companies may be worth less than investors think, writes columnist Jason Zweig in a recent Wall Street Journal article. Zweig explains that investors look to earnings-per-share to assess corporate profits and that, over the past twenty years, companies have devised “newfangled” measures of such as Ebitda—earnings before interest and taxes, depreciation and amortization. He argues that this modified measure of cash flow can be misleading. “This charade,” says Zweig, “is meant to flatter profit by… Read More