Novel Investor

Compounding investing wisdom...

2014 Year In Review

by Jon

Why is it that every year seems to go by faster than the last one? We have three weeks left before 2015 is here. It’s the perfect time for a review of 2014, find out what worked, what didn’t (hopefully learn from those mistakes), and look forward to 2015.

It’s also a perfect time to remind you there are three weeks left to the year to finish your annual financial review, make any tax changes, put a little extra in your 401k, start thinking about next year’s resolutions – I’ve got three suggestions if you need ideas – all while getting ready for the holidays and before the eggnog starts flowing. Piece of cake.

I’m not immune to the holiday rush either, and the timing is perfect for a review of sorts. Continue Reading…

Happy Hour: Day Trading 3.0

by Jon

Welcome to the end of the week! Just sit back, relax, and enjoy this weeks roundup in another edition of Happy Hour.

Day Trading 3.0

Mobility and the internet of things does a great job of breaking down long-standing barriers, for better or worse. Though, a couple of barriers should probably stay up. The Verge recently reported on one such example.

The story about someone, a high school kid no less, who got lucky day trading penny stocks is enough to convince a few people they can do it too. The falling transaction costs of trading is another excuse to try. The fact trading can now be done anywhere with a cell signal makes it more troubling. Continue Reading…

Picking the Worst Performing Countries

by Jon

Picking Worst PerformanceWhy would anyone choose the worst performing countries? We know that chasing the countries with the best returns doesn’t pay off.

Mean reversion is tough on investors who ignore their plan and chase returns.

We make it harder on ourselves by investing with a wandering eye. Markets revert because investors act irrationally, ditch their plans at the worst possible times, and chase performance. These investor mistakes are a big argument for a simple buy and hold strategy which works well over time.

What if you tried a different approach? A contrarian might look at the biggest losers. Continue Reading…

Happy Hour: The Early Turkey Edition

by Jon

Welcome to the end of the week! Just sit back, relax, and enjoy this weeks roundup in another edition of Happy Hour.

Happy Thanksgiving

Over 150 years ago, 1863 to be exact, President Lincoln finally proclaimed Thanksgiving Day a national holiday so we can forego our diet, stuff our face, and watch football with friends and family. Continue Reading…

Happy Hour: Short Term Opportunities

by Jon

Welcome to the end of the week! Just sit back, relax, and enjoy this weeks roundup in another edition of Happy Hour.

Short Term Opportunities

Jeremy Grantham, in the recent GMO Quarterly Letter (PDF), offers his perspective on the state of the markets, along with a discussion on the history and future of oil. The market info is a good read, but his thoughts on fossil fuels were interesting. He points out how oil has been a driver or a drag on the global economy depending on the price. Continue Reading…

Chasing the Best Performing Countries

by Jon

Chasing Single Country ReturnsA broad index fund is one way to get international exposure in your portfolio, but index funds aren’t perfect. One alternative is to pick single country funds but how do you choose which countries to own?

The problem with picking any fund is our reliance on recent performance. This is a common mistake investors make – chasing returns. Without a plan, the best performing funds are the first ones picked every time.

The investing world we live in tempts us with one, three, and five-year returns on every stock and bond fund around. We love to own what’s going up, we hate to miss out, so we chase returns of the best performing funds of the recent past. Sometimes it works, but not always. Continue Reading…

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