A puzzle that was so hard the first time around is simple in hindsight. This is known as Hindsight Bias. This week I talk about the psychological phenomenon of Hindsight Bias and investors’ over reliance on Performance Numbers. TRANSCRIPT: Hi Clients and Friends, Mike Brady here. This week I want to talk about Hindsight Bias and why many investors put an overemphasis on past performance. I mean if you’ve been an investor for some time, you’ve probably had that experience where you find a mutual fund that’s had a great track record for three, four, five years, or so, you ... Read More
I’ve been negative on the finances of state and local governments for some time, and continue to believe it will get worse before it gets better. This article takes a contrarian view, particularly on the debt, which I want to present to you. He argues there are “diamonds in the rough”, which is almost always true. I’m still quite negative on municipals in general, but it’s good to see the other point of view. LINK TO FULL ARTICLE Read More
John Paulson, a smart, rich, and successful hedge fund manager, has some pretty good words about “Risk” in a paper he recently published. Put simply, you have to understand what the Risk is before you come up with bumper sticker phases like “if you watch the downside the upside takes care of itself”. Interesting article….. LINK TO FULL ARTICLE Read More
While you’re reading this blog, I’m in East Africa working with 2 charities–BeadforLife and Bearing Witness Rwanda. Both are great organizations and I look forward to sharing more with you upon my return. As all my clients know, even when I’m out of town I watch things closely and (with modern technology) am available in short order. If you leave a message or an email, I’m back with you before you know it. I love Africa, the African people, and the good work we’re doing here. Africa is improving and I’m proud to be associated with groups that are making ... Read More
This week’s video is my 1st Quarter Review and my 2nd Quarter Preview. The first quarter was good (yeah!), and I list the items I’ll be watching and thinking about for the 2nd quarter. A must see video (if I do say so myself). TRANSCRIPT: Hi Clients and Friends, Mike Brady here. This is the first quarter review and second quarter pre-view for 2011. Now, in general, the first quarter was a little bouncy in February, but overall a positive quarter; actually, a very strong and nice quarter. The indexes, which of course you can’t invest in indexes, but they’re ... Read More
I’m a broken record. Europe continues to be sick and will slow down the global economy. The worst with Europe is not over. It’s the end of the beginning, not the beginning of the end. What does this mean for you? I’m not a fan of a large holding in Europe. Internationally, though, I continue to be impressed with some of the emerging markets out there. Irritatingly, Europe is being forced to address many fiscal imbalances we have here in the United States, but they’re just a number of years ahead of us in addressing them. I continue to have ... Read More
Bonds go up and down in value based on interest rates, credit quality, and simple supply/demand. The first quarter was a bumpy ride for US Treasuries (as I mention in my video which you should have listened to already), and essentially ended flat to slightly negative. Much of what will happen in the next quarter will be dependent on the ending of quantitative easing in June and whether the Federal Reserve increases interest rates. What to do? Stay tuned and be diversified. Too much of an allocation to any category can be negative. Too many Treasuries may lead you to ... Read More
Facebook $75 Billion? Groupon at $25 billion? Twitter at $10 billion? Come on…..we’ve seen this before. It’s called the late 1990s. I don’t like it and am avoiding it like the plague. Click on the link below for a more detailed article. CLICK FOR FULL ARTICLE Read More
A friend of mine, Ian Engle, is Executive Director of the Center for People with Disabilities. He recently gave a great interview (in my humble opinion) talking about the Independent Living Movement, Americans with Disabilities Act, etc. He’s very knowledgeable and cuts right to the chase. I like that. Consider listening to his 4 minute interview. Read More
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The Dow Jones Industrial Average is an unmanaged, price-weighted index of 30 large capitalization stocks with dividends reinvested.
The Standard & Poor’s 500 Index (“S&P 500”) is an unmanaged, market capitalization weighted index of 500 widely held stocks, with dividends reinvested, and is often used as a proxy for the stock market.
The Nasdaq Composite is an unmanaged, market capitalization weighted index of stocks listed on the Nasdaq Stock Exchange, and are reported as price return without reinvestment of dividends.
Indexes are often used as a proxy for the stock market and cannot be invested in directly.