Articles: Psychological Hurdles


The bumpy road to recovery
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December 08, 2009
Investors are always very interested in the returns they get on their portfolios. But as Will Rogers famously remarked, the return OF his money was more important to him than the return ON his money.

Millions of investors may be feeling the same way these days, waiting for their portfolios to return in value to their high point, which for most people occurred in the fall of 2007. How fast a portfolio bounces back from adversity is an important measure of the risk of that portfolio.

Inflation, politics, history and investments
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June 22, 2009

Fear is never far from investors’ minds, especially during tumultuous times like these. Nervous investors will always find plenty of authors, gurus, prognosticators and analysts who are willing and able to feed these fears.

Emotions and the market
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June 01, 2009

With the high volatility in the stock market over the past year, emotions have been running at an all-time high for many investors. Staying on track has become harder than ever.

Fear and your Financial Future
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March 10, 2009

Should I move all my money to gold? Is the government leading us into another depression? Should I ditch buy-and-hold and become a market timer? What will be the effect of the stimulus plan? When will things turn around?

Burying your head in the sand: Feels good now, hurts like hell later
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February 12, 2009

Not a week goes by that I don’t hear somebody say: “I don’t really know what I’m worth. I have stopped looking at my statements.” I totally understand the urge to avoid unwelcome news. It’s part of being human.

Your investments: Who's in control?
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January 09, 2009
It’s no secret that the year just ended was the worst in memory for most investors. If something could go wrong, it probably did. In the big picture of Wall Street’s investment banks and other financial institutions, it’s easy to place lots of blame. Sound, affordable measures to prevent more of the same are harder to come by. But at least lots of public officials are on the case.
An unpleasant year bites the dust
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December 30, 2008

Almost all investors will be glad that 2008 is coming to a close.

The bad news is well known.

•    The combination of too much leverage and excessive speculation in the financial and housing sectors has depressed global asset prices more than any time since the Great Depression.
•    Several major financial institutions couldn’t survive; for others, including the Big Three U.S. automobile manufacturers, the future is uncertain.
•    The country is in the midst of tough recession which began in December 2007.
•    Worries are widespread concerning retirement, jobs, housing and the long-term economic health of the nation.

And yet, even in these hard times, there are good reasons to be hopeful.

Is it time to get out of the market?
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June 27, 2008

With the intense volatility the markets are experiencing, and economic news looking negative, many investors have been asking if they should sell their equity funds and move to the sidelines until the economic news gets better. History tells us that would most likely be a bad decision that could force investors to miss out on sizeable gains.

Paul Merriman: Ten reasons to ignore Jim Cramer’s advice
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December 12, 2007
CNBC’s Jim Cramer may be a popular television entertainer, but whether he’s helping investors is another matter.  This question was brought to my attention recently in a sharp exchange on the Web site Dow Jones MarketWatch between Cramer and Paul B. Farrell, a MarketWatch columnist who has earned my respect.

Paul is a veteran of business and Wall Street. He’s also the author of nine books, including The Lazy Person’s Guide to Investing. Recently, he watched Cramer’s Mad Money on CNBC and was not amused. In addition to costing viewers their valuable time, he wrote, Cramer’s wild TV antics also are likely to cost them money. Paul made a powerful case that intelligently selected “lazy portfolios” outperform the active stock trading advocated by Cramer.

Lessons from the BIG CRASH of 1987
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October 19, 2007

Do you recall what you were doing on October 19, 1987?  I sure do. Today marks the 20th anniversary of the stock market crash of 1987, when the DJIA experienced the worst single day percentage drop in history (approx 23%!).  To put this in perspective, this is the equivalent of the DJIA dropping about 3,000 points in one day from current levels.  At the time, I was 23 years old and under heavy fire working the trading phones at Schwab.  This was before internet trading, and before Schwab had call centers.  We were overrun.

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