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. …
Back to Basics
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 …
We must control our thoughts to create wealth
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 …
To build wealth we must make good choices
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 …
Why are Investors so bad at Investing?
Contrary to popular belief, the major part of an investor’s return is not determined by asset allocation: i.e., what “basket” of stocks you are in. Nor is it determined by the overall performance of the stock markets. The main predictor of return is the behavior of investors themselves. “We don’t see people with investment problems, we see investments with people …
A New Take on Evaluating Your Financial Advisor
By Craig Verdi, CFP® There is a lot of news and information out there on how to choose a financial advisor. Typically, the general public is told to ask questions about items such as fee levels, specific investment strategies, performance, and opinions on future performance. “Performance” is an illusion. The only performance that counts is your account. Each of our …
D’OH!-Why Do I Do Dumb Things?
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 NIV 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 …
Anchoring- Defective Thought Patterns
By Craig Verdi, CFP® My new book, “Mindful Money” details the many thinking errors homo sapiens repeat repeatedly. These errors are responsible for more losses in the market than CNBC! 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 …
The Truth About Trading
By Craig Verdi, CFP® “You get recessions, you have stock market declines. If you don’t understand that’s going to happen, then you’re not ready, you won’t do well in the markets.” -Peter Lynch It seems you can’t turn on the television without hearing a commercial inviting you to join an online trading system. Or you hear, “trading on your terms” …
Decades not Days:
By Craig Verdi, CFP® “The Market is the great allocator, from the impatient to the patient” Warren Buffett The financial media loves to make you think you should invest for the short run. Having faith and patience in the long term growth of quality assets does not sell air time. They have to keep you thinking you constantly need their …
Is the Market Rigged?
By Craig Verdi, CFP® I hear this question a lot more than you may think. The short answer is NO, the market is not rigged. We have the most efficient market in the history of the planet. If Warren Buffet buys a share of Coke (KO) and I buy a share of KO, we get the exact same deal (assuming …
Faith and Patience
By Craig Verdi, CFP® This is not in the sense of religious faith, or faith in something that cannot be demonstrated. It is faith in an economic fact. That is, in general, you must have faith that certain “things” are going to become more expensive and more valuable over time. This seems intuitive, but it is not. Very few people …
GOLD!!! – A Note on Commodities
By Craig Verdi, CFP® Many people confuse Commodities such as gold, silver and copper as equity assets. They are not! Contrary to what the gold salesmen are pitching, the price of metals, crops, lumber or almost any commodity has never kept up with inflation. There are times when many things are cheap, such as steel is now. We have steel …
Why does inflation seem so bad?
By Craig Verdi CFP® Inflation seems bad because we really are paying higher prices and in some cases much higher prices on goods and services. Healthcare is the glaring exception when it comes to inflation. It is much higher and probably will continue as we get older. But with the old health care from 50 or 100 years ago you …
Can Bonds Crash?
By Craig Verdi, CFP® “Don’t you think I should have a certain percentage in bonds? Everything I read says that I should have 20-50% of my money in bonds.” I hear these things all the time. And there have been good times to buy bonds. As I write this it is the end of April, 2015. The yield on the …
Craig’s Trip to Montana
Some pics from my trip to Livingston Montana. We were there for 5 weeks. Thanks to John and Mary and everyone who made it possible for me to get away on my 30th anniversary of being in business. My first visitor was Wade Thomas who taught me the basics of drift boat handling. We had some great floats and memorable …
How do stocks work?
By Craig Verdi, CFP® Why do good companies increase in value in the long run? The short answer is by increasing the sales, earnings, growth and distributions/dividends of the company. Let’s look at a very simple example of a company you have a chance to invest in. Imagine that a young entrepreneur, Marcus, decides to open a hot dog stand …