At the end of 2022, “The Magnificent Seven” was no more than the title of a 1960 American Western starring Yul Brynner and Steve McQueen. By the end of 2023, however, the “Magnificent Seven” turned into the name of a group of seven stocks that contributed more than two-thirds of the S&P 500® Index’s return […]
Diversification vs. Concentration in the Era of the ‘Magnificent Seven’ Read More »
Imagine that you are at an interview for your dream job. The interviewer says, “I have 100 applicants for this job. Tell me why I should choose you.” You are an appropriately confident person, not an overconfident one. So, you say: “Honestly, I don’t know. I don’t know the qualifications of the other 99 applicants
The Pitfalls (and Benefits) of Overconfidence Read More »
“I split my contributions 50/50 between bonds and equities,” Harry Markowitz said in a famous 1998 interview with Jason Zweig.1 Markowitz readily admitted that he did not compute co-variances and draw a mean-variance efficient frontier. “Instead, I visualized my grief if the stock market went way up, and I wasn’t in it —or if it
The Unheralded Contributions of Markowitz to Behavioral Portfolio Theory Read More »
In a 1974 episode of the TV sitcom “All in the Family,” Archie Bunker gleefully tells his wife Edith, daughter Gloria and son-in-law Michael about his union’s labor settlement in a time of high inflation. Edith: “Archie, did you get a good raise?” Archie: “Edith, a three-year contract with 15%.” Michael: “Arch, what about the
Tripped Up by the ‘Money Illusion’ Read More »
We unpack Silicon Valley Bank’s descent to insolvency and federal officials’ decision to extend deposit insurance to depositors whose accounts exceeded FDIC’s general limit of $250,000.
The Herd Mentality That Drives Bank Runs Read More »
We unpack the pros and cons of typical three-bucket portfolios, including the potential behavioral benefit and costs.
Understanding the Behavioral Advantage and Trade-Offs of Bucket Portfolios Read More »
Few people have all the time and money they want. Money squeeze is common, as is time squeeze, but each take different forms among the working class and the elite.
More Time or More Money? How Wealth Affects What We Value Read More »
In these times of market anxiety, our emotions can get the best of us. While we cannot eliminate emotions, we can learn to manage them through cognitive reflection.
Understanding Emotions During Volatile Markets Read More »
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