There has been a lot of interesting things going on this last week or so regarding the planet we find ourselves on. The market has shown strong resilience. Again, today the re-opening optimism is great. Traffic is picking up. There is a lot of pent up demand. I went out Friday night in Old Town Scottsdale. People were out, parking …
I am burnt out on you know what. I will try to keep it just to some fun facts in “Craig’s Covid Corner” because this too shall pass. Maybe not next month or even next year. Once I start giving predictions we all lose. There are plenty of predictions out there. Anything that involves you getting out of stocks for …
This time I just want to share a story and a couple of observations. The story is from Thomas Friedman of the New York Times. If you know him, you will probably know I would rarely if ever agree with him, but this morning he made some good points. The article regards Sweden and the unique approach they have taken …
Blog April 22, 2020 Let’s get Back to Work! My dining room got painted today. Normally I would “stimulate the economy” by hiring someone, but I somehow found the time to do it myself. I built shelves for a new linen closet. I took my dog to the park. I planted more plants in the front of the house. I …
April 15th 2020 Scientific explanation: For those of you that have not heard of the coronavirus and Covid19, I will bring you up to speed. You are supposed to stay home and play with your toilet paper until you run out. Don’t worry if you run out, there is none available anyway. This could have all been averted if Al …
March 1, 2020 Covid 19 Thought you may want some comments on Covid19. Well, it’s way worse in people’s heads than in reality. But…reality rarely is used in these types of situations. The SARS breakout sent the market from about 8400 to 7400. That is a 16.6% correction, (we are not quite there yet for COVID19.) In May, just 2 …
Blog for February 26, 2020 Hindsight Bias- Logical Fallacy #6 Hindsight Bias is very common and one of the worst fallacies we can have when investing for the long term. Let me explain. I can’t tell you how much I hear this bias. It is related to “should statements”. You may recall that should statements are false or unknowable. When …
January 20, 2020 Thank you for your continued trust in Verdi Wealth Management. My goal has always been to offer the best advice and service when helping you plan for future or current wealth. We were all rewarded last year with the performance of the Stock Market. People ask me, “what do you think will happen to the market in …
11-06-2019 Logical Fallacy 5 – The Bandwagon Effect When your teenager says, “but Mom, everyone is doing it” that’s the bandwagon effect. This fallacy assumes that just because “everyone” supposedly thinks or does something, it must be right. Unfortunately, this is used a lot in advertising or promoting an idea, product or philosophy. It may appear in the form that …
Extrapolation is an act or instance if inferring an unknown from something that is known. For instance, we are 60 miles from a huge cliff, speeding across the desert at 60 miles per hour. Extrapolate that and we will all over the cliff and die in 60 minutes. Sure, that could happen, but it really is an instance of the …
Logical fallacy 3 By Craig Verdi, CFP® Anchoring: a quick story I am at my millionth conference for investment advisors. This is about 15 years ago. The speaker walks out and with no introduction he declares loudly “I can tell each one of you in the audience EXACTLY the amount that each of your clients have in their accounts.” He …
This is the first of a series of blogs on 10 Logical fallacies: “Costly tricks our minds play on us”. When it comes to probability, a lack of understanding can lead to incorrect assumptions and predictions about the onset of events. That is the basis for the Gambler’s fallacy. One of the most famous disclaimers in finance is that “past …
Over the next several blogs I will go through the top ten logical fallacies that we all have had or still have. Anchoring The extrapolation error The Gambler’s Fallacy Hindsight Bias The Bandwagon effect I wish I had a magic wand fallacy Appeal to Heaven Confirmation Bias Negativity Bias The sunk cost error Let’s begin with “Anchoring” Anchoring: A quick …
April 17, 201 From 1977 to 1990 Fidelity Investment‘s Magellan Fund averaged a 29.2% per year! This was during the time Peter Lynch managed the fund. That record has never been matched. He is considered one of the most successful stock market investors of all time. His style highlights the importance of research and patience. He believes controlling your thoughts when making investment decisions is the …
If we love an asset at $60 per unit, we should really Love it at $40 per unit. Obviously, we would buy many more at $40 if we have the cash. Except we don’t. Our fearful nature immediately triggers the thought: “What if it goes down to nothing”? Can we really believe that a top-quality asset like MacDonald’s (MCD) is …
Since the 1960s, when Norman Dacey touted his book, “How to Avoid Probate,” so called “living” trusts (more properly, “revocable trusts”) have been incredibly oversold to people who do not understand what they are buying. Well intentioned folks are lured by slick advertisements to attend free seminars often presented by lawyers who are little more than salesmen. These promoters’ prey …
The superior long term returns of equities, always have been and always will be, available only to people emotionally capable of embracing uncertainty.” Nick Murray Think of a large growing company. Let’s take Boeing Corp. Right now, if you tie up your money in a bond with them for 10 years, they will pay you about 4.5% interest per year. …
Before we get back to specific thinking errors, let’s start with some basics: First, should we own equity or debt? In other words, should we be investors or lenders? It depends on if you want to build real wealth. I will assume you do. The only way to grow wealth in real dollars is to own equity. All or almost …
Last time we talked about the under-performance investors have compared to the market as measured by the S&P 500 index. Obviously, the index is doing something that investors aren’t doing: Staying put!! Now, staying put sounds easy…until you try it. The market will take a large downturn every 4-5 years. During those times many people will be fearful and may …
By Craig Verdi, CFP® “For I have the desire to do what is good, but I cannot carry it out”– Apostle Paul, Romans 7:18 Not carrying out what we want to do. Obviously not a new problem. To be a good investor we must execute. Sometimes, many times, we must do what is right, and not what we feel like …