The ABC’s of behavioral biases: H-O
There are so many investment-impacting behavioral biases, we could probably identify at least one for nearly every letter in the alphabet. Today, we’ll continue with the most significant ones by looking at: hindsight, loss aversion, mental accounting and outcome bias. HINDSIGHT What is it? In “Thinking, Fast and Slow,” Nobel laureate Daniel Kahneman credits Baruch […]
The ABC’s of behavioral biases: F-H
Let’s continue our alphabetic tour of common behavioral biases that distract otherwise rational investors from making best choices about their wealth. Today, we’ll tackle: fear, framing, greed and herd mentality. FEAR What is it? You know what fear is, but it may be less obvious how it works. As Jason Zweig describes in “Your Money […]
The ABC’s of behavioral biases: A-F
Welcome back to our “ABCs of Behavioral Biases.” Today, we’ll get started by introducing you to four self-inflicted biases that knock a number of investors off-course: anchoring, blind spot, confirmation and familiarity bias. ANCHORING BIAS What is it? Anchoring bias occurs when you fix on or “anchor” your decisions to a reference point, whether or not […]
The ABC’s of behavioral biases: an introduction
By now, you’ve probably heard the news: Your own behavioral biases are often the greatest threat to your financial well-being. As investors, we leap before we look. We stay when we should go. We cringe at the very risks that are expected to generate our greatest rewards. All the while, we rush into nearly every […]
Market commentary – October 2017
Stock Markets Equity market returns over several periods ending September 30, 2017 are shown on the graph to the right. Here are a few highlights: Stocks provided above-average returns over the past quarter – REITs lagged. Non-domestic markets led the way in recent periods; over longer periods it was domestic markets. While it would be […]
Dow 22,000 – why we’re here and what it means
On August 2, 2017, the Dow Jones Industrial Average set a record, closing above 22,000 for the first time. People will debate the cause of the rally and how long it will last, but there is only one answer that matters to the prudent investor – time. Markets go up over time. Over the last […]
And now… A few things we won’t be doing as your financial advisor
Any investor who spends even a modest amount of time reading financially-based magazine articles, or occasionally watches or listens to financially-based TV or radio programs, can’t escape all the pronouncements financial advisors make to prospective clients. So, if you are new to Rockbridge, I thought it would be fun to share a few promises with […]
Market Commentary – July 2017
Stock Markets The chart at right shows stocks performing well in the past quarter and six-month periods. Year to date, domestic large-cap stocks were up about 9% while small-cap stocks were up 5%. Stocks traded in international developed markets and emerging markets were up 14% and about 19%, respectively. Over three, five and ten years, […]
Why Perspective Matters
I often say that one of our primary roles as an advisor is to provide context and perspective for clients, allowing us to collaboratively make better decisions. Behavioral economists have identified narrow framing as the tendency for investors to make decisions without considering the big picture or long-term effect on their portfolio. This behavior can […]
History of the Fee-Only Advisor Movement
I recently returned from a fee-only advisor industry conference. In addition to educational opportunities, it was a rewarding experience to spend time with other like-minded professionals. Rockbridge advisors have been attending these conferences for almost 10 years, so I thought it would be interesting to share a bit of the history behind the fee-only movement. More […]