The Two Types of Investment Risk (That Every Investor Should Know)
Jul 10, 2019 | Investing Strategies
Academic theory recognizes two types of investment risk. Understanding both types of risk, and the difference between them, can help make you a better investor. There is also a money-making opportunity here. Let’s take a look. The two risk types are idiosyncratic risk and systematic risk. One exists at the level of individual companies or stock investments. The other exists…
How to Profit From the Pygmalion Effect
Jul 03, 2019 | Investing Strategies
Successful investing is as much about behavior as it is about math or analysis or picking the right stocks. That is why traits like consistency, discipline, and self-control can translate into long-term profits for the individual investor. In short, improving behavior can improve results. That is exciting because there are so many factors beyond our control. We can’t influence the…
Why Negative Interest Rates Are a Positive for Gold and Bitcoin
Jun 28, 2019 | Investing Strategies
Gold and Bitcoin are having a resurgence. You could even call it an awakening. Gold recently broke out to six-year highs above $1,400 per ounce. More importantly, gold has broken out of a giant base-building pattern more than five years in the making. Bitcoin, meanwhile, recently smashed through the $10,000 barrier, and soared as high as $13,000 before retracing in…
Why Investing is Harder Than Physics (and What to Do About It)
Jun 26, 2019 | Investing Strategies
Dr. Richard Feynman, the Nobel Prize-winning physicist, once reportedly said at a Caltech graduation ceremony: “Imagine how much harder physics would be if electrons had feelings!” This offers a clue as to why investing is harder than physics. “Feelings” are a tough nut to crack. While scientific elements behave rationally, markets behave emotionally. Investing is harder than physics in this…
Crude Oil is Sending a Bearish Signal for Emerging Markets
Jun 21, 2019 | Investing Strategies
Should you invest in emerging market equities? Numerous research houses say yes. Some money managers have favored the emerging market growth story for many years, on the grounds that emerging market equities have a better long-term growth story and less of a valuation premium than U.S. equities. But the valuation gap in favor of U.S. equities is there for a…
What Investors Can Learn From U.S. Navy Warship Crews
Jun 19, 2019 | Investing Strategies
The phrase “months of boredom punctuated by moments of terror” is more than a century old. You can find it in the New York Times’ “Current History of the European War,” published in 1915, as a description of infantry work in the trenches. The concept still applies to modern warfare today. It also applies to investing, to the extent that…
A Chance to Replicate the Greatest Trade of the 1930s
Jun 14, 2019 | Investing Strategies
John Maynard Keynes was not just a famous economist. He was also a world-class money manager and an inspiration to Warren Buffett. In the 1930s, one of Keynes’ best-ever investments was a concentrated position in South African gold stocks. With the threat of fiat currencies weakening dramatically in the coming years, as central banks go back to emergency stimulus programs…
How Bearish Positions Can Help You Hold Bullish Ones
Jun 12, 2019 | Investing Strategies
Here is something that top-performing hedge fund managers know: Bearish positions in a portfolio can make it easier to hold bullish ones. In other words, if you have positions that are bearish — that benefit when markets fall — it can make it easier to maintain positions that are bullish (which tend to profit when markets rise). The way this…
Reasons to be Bearish on Automakers (Except Ferrari)
Jun 07, 2019 | Investing Strategies
The auto manufacturing industry already had a bleak outlook. The prospect of prolonged trade war makes that outlook much worse. In fact, there is only one automaker that looks attractive right now — Ferrari (NYSE: RACE); all of the others look bearish. You can track the auto industry in general via CARZ, the global auto index ETF. It could also…
A Look Back at the Smoot-Hawley Tariff Act
Jun 05, 2019 | Investing Strategies
In a speech to the House of Commons in 1948, Winston Churchill said: “Those who cannot remember the past are condemned to repeat it.” Churchill was paraphrasing the philosopher George Santayana. To elaborate the point, Churchill added: “We must always look forward, but we have to understand our history in order to not repeat the mistakes of the past. I…
