Article Category: Psychology

Your Money is Your Second Business

Your Money is Your Second Business

Have you ever wanted to be a business owner? Well, congrats ... you already are. The minute you have even a few thousand dollars to your name, you're officially a professional money manager running your own investment firm. Of course, you probably don't see it that way, but that's because you haven't been enlightened yet. No one has ever spelled it out for you before. Well ... it's time to fix that.


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Posted in: Dividends Educational Expenses Motivation Psychology Retirement

How to Predict Future Stock Market Returns

How to Predict Future Stock Market Returns

Every year, top Wall Street analysts put their thinking caps on and try to forecast the upcoming year's market return. The result of their analysis usually comes in the form of "price targets" which indicate where major indexes such as the S&P 500 are likely to be at year end. While price targets have little value themselves, what is valuable to investors is having a framework in which to view future returns.


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Posted in: Asset Allocation Dividends Earnings Educational Psychology Stocks

Lessons From a Textbook Correction

If you've ever caravanned with others on a drive or hike, then you know that sometimes different parties move at different speeds. The inevitable result is that the lead party has to slow down, or stop and wait for the others to catch up.

If you happen to be climbing Mount Everest, or trekking across the Pacific Coast Trail, then these "pauses" to regroup can be a lifesaver. They allow everyone to check in and verify that all is well before the climb continues.


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Posted in: Corrections Dow Theory Economy Psychology

From Bullish to Neutral, Thanks Quants

Dow Theory considers daily action in the stock market to be nothing more than noise, and that presupposition may be gaining in importance. I've been hanging on to the chart below, waiting for an opportune time to present it, and I think that time is now.

This chart, using data from Aite Group and Goldman Sachs, claims to show the share of trading that is done by algorithms. As you can see, the majority of equity market trades (around 65%) are executed by computers based on preset logic.


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Posted in: Dow Theory Gold Psychology Recessions

Price Corrections vs. Time Corrections

In case you've been under a rock for the last four months, we're in the midst of an ongoing correction. Well ... at least the major averages are. The market itself, as measured by breadth, has been setting new highs for the past three weeks or so.

You can see this in the charts below. The top chart shows the NYSE Advance-Decline line, and the bottom chart shows the Advance-Decline line for the Nasdaq.


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Posted in: Corrections Interest Rates Primary Trend Psychology Recessions

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