Investors Need an Iron Stomach to Hold the Best Performing Stocks

Morgan Housel of The Motley Fool writes a good piece on how difficult it can be buy and hold the very best performing stocks over time. As Housel points out, the best performing individual stock from 1995-2015 was Monster Beverage — up 105,000% over that 20 year period. That return would have turned $10,000 into a cool $10 million. But, as Housel points out, Monster has been an incredibly volatile stock, so volatile that most investors… Read More

Personal Finance is Personal Writes Housel

Financial analyst Morgan Housel draws a parallel between medicine and investing to make a simple, but important, point: “personal finance is deeply personal” so “coming up with a solution that lets you sleep at night, rather than one that’s academically superior, is how [a financial advisor] help[s] people.” He analogizes the “doctor knows best” era of medicine to the current state of financial advising, arguing that investing needs a “moment of clarity” similar to the… Read More

Why Doing ‘Nothing’ Is Good For Your Portfolio

When fears are high, it’s natural to want to jump out of stocks. But while it might seem logical to avoid equities during tough times, The Motley Fool’s Morgan Housel says history shows otherwise. “Building wealth over a lifetime doesn’t require a lifetime of superior skill,” Housel writes (h/t The Big Picture). “It requires pretty mediocre skills — basic arithmetic and a grasp of investing fundamentals — practiced consistently throughout your entire lifetime, especially during… Read More

What’s Your Advantage?

If you don’t want to put all your faith in luck, you need to have an advantage to beat the market over the long haul. But The Motley Fool’s Morgan Housel says that many investors don’t really think about what their advantage is — or whether they even have one. Housel notes that, late in his life, value guru Benjamin Graham actually talked about how he thought stock-picking wasn’t for most investors. So many investors… Read More

Investors And The “Trifecta Of Failure”

What separates great investors from the rest? The Motley Fool’s Morgan Housel says it has to do not with financial acumen, but instead with psychological prowess. While most investors are “mental catastrophes” the great ones “are masters of psychology,” Housel writes (h/t to The Big Picture). “They can’t control the market, but they have complete control over the gray matter between their ears.” Housel says most investors suffer from a variety of cognitive biases, including… Read More

Why Short-Term Market Timing Is Futile

In a recent piece for The Motley Fool, Morgan Housel offers some interesting data on why trying to time the market is so dangerous.  “There have been about 21,000 trading sessions between 1928 and today. During that time, the Dow went from 240 to 13,000, or an average annual growth rate of 5% (this doesn’t include dividends),” Housel writes. “If you missed just 20 of the best days during that period, annual returns fall to… Read More