Old Stories; True Stories

Everyone loves market premiums. But not everyone can withstand the risks. There are two possible responses – try to time the premiums or ride out the risk for the return on the other side. Which works better? Let’s look at history. When markets are stormy, it’s natural to want to pull your portfolio into a […]

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Connecting the Dots

Human beings love stories. But this innate tendency can lead us to imagine connections between events where none really exist. For financial journalists, this is a virtual job requirement. For investors, it can be a disaster. “Needing to create order from chaos, journalists often stick the word “after” between two events to imply causation. In […]

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Avoiding Contagion

‘Contagion Spreads in Emerging Markets as Crises Grow’: That was a recent headline on Bloomberg, reflecting a spate of articles about a rocky start to the year in some developing economies. But haven’t we been here before? Emerging markets historically have delivered higher returns than the markets of rich world economies like the USA, the […]

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The Golden Ticket Trap

In a popular children’s story, the young hero pins all his hopes on finding one of a handful of ‘golden tickets’ hidden among millions of candy bars. It seems many people approach investing the same way. The notion that the path to long-term wealth is in locating secret and previously undiscovered treasures in the global […]

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