A factor is a characteristic or trait that explains portfolio returns. Implementing a factor investing strategy means targeting securities with characteristics that you’d expect to generate different returns than you’d earn from owning the entire market. For example,...
Confirmation bias is the tendency to seek out information that supports your beliefs and ignore information that contradicts it. To better understand how this occurs, below is a variation of a popular logic puzzle that uses four cards to test a simple rule: “If the...
Building the perfect portfolio doesn’t matter one bit if it doesn’t align with your willingness and ability to take risk. Evaluating your own risk tolerance is difficult for individuals because of the emotions that are intertwined with investing. Even the...
Investing is a zero sum game in which individual investors frequently end up on the losing side, but that doesn’t have to be the case. I believe individual investors have significant advantages if they would only simplify the game. I’ll explain through the context of...
One of the things you come to learn about writing is that some of your favorite work doesn’t generate the buzz you expect. Some of my simplest articles have been my most popular – maybe the world is trying to tell me something – whereas some of the...
