Archive for the Stock Market Category


The Securities and Exchange Commission is Above the Law

Following up on a theme we’ve discussed before about certain people having access to trading options that you—the retail investor—do not, we figured we’d talk today about the Securities and Exchange Commission and its approved practice of insider trading among its employees. You see, at the SEC, insider trading is not only allowed; it’s required. […]

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The Dow Jones Industrial Average: 8% per Year?

While there is no doubting the last couple of years have been really great years for the stock market (if you think of it in terms of the growth over the year, rather than growth from many years past), but we’d like to take a moment and think of things a tad longer term. But […]

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Can we Please Stop Pretending that Market Corrections are Unusual and Rare?

Stock Market Corrections are a fact of life in a our economy. There are several theories that seek to explain this phenomenon, and I personally like to think it’s a result of our warped implementation of market economics, but what do I know? Lately certain members of the press have been buzzing a bit about […]

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Stock Ownership Hit’s New Low According to Gallup

Earlier this month, Gallup released data it collects concerning stock ownership in the United States. The data show that stock ownership among Americans is at its lowest point since Gallup began tracking the data in 1998 with just 52% of American’s surveyed claiming to either directly or indirectly own stock in a public company. Historical […]

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What is Value Investing and How Does it Work?

First, I guess I should define value investing.  The best thing I can really do is to let you know from the beginning that I believe that being a value investor is much more of an investment style than it is an adherence to any one set of strict criteria. That being said, there are […]

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Second Dip? More Chartology; Just as Bleak as Last Time

We’ve heard a lot recently about the fiscal cliff and the second dip, so recently I decided to spend a weekend reviewing stock market charts. Some of you might remember this guy from last year. Consider this part two.

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Bill Gross: Stocks are Dead?

Bill Gross of PIMCO, the authority on bonds (or so they say) announced earlier this month that the days of investing in equities for the long run (you know the sales slogan of Merrill Lynch, Morgan Stanley, Edward Jones, and company) is over. Now, does it surprise us that the head of the the largest […]

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Modern Portfolio Theory turned upside down

Let’s start with a brief discussion of modern portfolio theory (MPT)  just to make sure we’re all on the same page.   To avoid a less than exciting academic foray into MPT, I’ll provide a basic definition. Basically, the theory is that individual investment (a particular asset i.e. stock or bond) selection should not be […]

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Compound Annual Growth Rate vs. Average Annual Return–Wall Street’s Greatest Sleight of Hand

I’ll be honest with you—writing this post makes me feel a bit like Jack Nicholson’s character in the movie “A Few Good Men”. Remember when Nicholson is being questioned by Tom Cruise in the most memorable scene from the movie and Cruise is demanding the truth? Nicholson replies, “You can’t handle the truth!” If you’ve […]

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Why Stock Market Returns Matter, But Not for the Reasons You probably Thought

I’ve been known to quote stock market returns from a Compound Annual Growth Rate (geometric mean) point of view.  This calculation takes into account the effect time has on a rate of return and is wildly more useful than simply looking at average rate of return (usually quoted as the arithmetic mean). But any good […]

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