Investors often grapple with an investing paradox. While the stock market is a fantastic place to grow wealth, most individual stocks are not. The phenomenon of the average stock return can be puzzling. But understanding it is crucial for developing a successful investment strategy. Think you already know everything about the stock market? Take a break from reading this post...
The original S&P 500 stocks were re-introduced in 1957 as a stock market index to track the value of the 500 largest listed American companies including all sectors. What would have happened if an investor had bought the original S&P 500 stocks in 1957 and held them passively? And, how does that return compare to investing in the actual S&P 500 which is periodically...
What constitutes a "good" rate of return can be elusive and highly subjective, varying significantly from one investor to another based on their individual financial goals, risk tolerance, and investment horizon. However, the concept of rate of return is pivotal in understanding how investments grow over time and how different strategies yield different outcomes. This post examines how risk and...
Successful investing might be easier to achieve than many might expect. The trick is not using some complicated strategy. But instead, sticking to simple, easy to understand, and consistent principles. In this post, inspired by investment advisor Ben Felix, I’ll share 19 insightful lessons about successful investing that highlight the importance of simplicity and consistency, when thinking about the...
“Let your profits run, and cut your losses”. Is a phrase coined by economist David Ricardo encouraging investors to resist the urge to sell profitable positions too early. The adage has roots in simple math. A losing position can only fall 100%, whereas a winning one can potentially gain infinitely. So, how can this timeless wisdom help investors today?...
The rise of indexing has crossed a new threshold. Passive strategies now make up more than 50% of all investment assets. Recent reports show we’ve crossed the Rubicon of passive vs active investing. Indexing has won! The reasons are clear: indexing outperforms active management most of the time. And, its much easier for investors to achieve better returns...
The best investors are deliberate and consistent. And, they don’t let their emotions get in the way. Instead, they create consistent investing habits. Day after day, week after week, year after year; the most consistent and disciplined investors succeed. While fickle, emotional, and impulsive investors flounder. So, how can investors encourage consistency in their investing process? This blog post will share...
As the thrill of quick gains often grabs headlines, passive investing emerges as the silent giant, embodying the virtue of patience in a race paced by speculation. It's the strategy that champions the adage "slow and steady wins the race," turning a deaf ear to the siren calls of market timing and rapid trading. Surprisingly, passive investing often beats the...
It's a common misconception that average investors will earn an average rate of return. Unfortunately, the reality is far from this ideal. Multiple factors contribute to the disconnect between the expected return and the actual return that the average investor achieves. The average market return can be achieved by investing in passive index funds. Surprisingly, the returns of...
With Johnson & Johnson’s recent announcement about spinning off a significant portion of its stake in Kenvue, investors find themselves at a pivotal crossroads. This strategic move marks a major shift in the corporate landscape, offering both opportunities and challenges for those holding J&J shares or considering an investment in Kenvue. The spin-off is not merely a corporate restructuring but...
