Welcome to the July 2013 Carnival of Passive Investing, a monthly collection of the best and most intelligent Passive Investing strategy articles around the internet. Some people foolishly want to beat the market (want being the key word) but we just want to invest with it. The purpose of the carnival is two-fold: To provide a forum to showcase articles and research in passive investing strategies (i.e., investing in ETFs, index mutual funds, etc., in such a way that one avoids…
This is the one that's probably freshest in the minds of most people reading this, so I'll just give you a quick background. Easy credit and soaring real estate values led to rampant real estate speculation by people who, quite frankly, had no business speculating in real estate. The mortgage loans used, which in many cases were made for even more than the inflated values of the underlying homes, were packaged and sold to institutions as "investment grade" securities.
I recently wrote a guest blog entry for the My Life ROI blog entitled I Learned How to Invest by Learning How to Save. Juicy Excerpt: If you have ever tried to save effectively, you know that price matters. Big time. It’s common knowledge that that’s so with everything other than stocks. By learning how to save, and by then not forgetting the lesson just because the experts were telling me that different rules apply with stocks, I learned how to invest. Some wild comments posted…
Set forth below is the text of a comment that I recently posted to the discussion thread for another blog entry at this site: “My fantasyland comes with a Nobel prize. Yours comes with death threats” etc etc. No, those are both your fantasies. That’s really the heart of the problem, isn’t it? Everything you write is fantasy. You used to toss in a bit of reality every once in a while. Back when people actually sent you emails. But those days are long gone. Your post-Wade psychotic break changed everything. The bottom line is that the Buy-and-Hold retirement studies have not been corrected to this day. I pointed out in my famous post from the morning of May 13, 2002, that the Greaney study lacks an adjustment for the valuation level that applies on the day the retirement begins. All of the words that have been spilled over the following 16 years show that I was right. Thousands of people have looked at the Greaney study during that time. Not one has been able to identify a valuation adjustment. A failed retirement is a serious life setback. Greaney should have corrected his study within 24 hours of the moment when he learned of the error he made in it. Now — The backstory is that Greaney’s retirement study would be perfect in a world in which the market was efficient, which is the world that Bogle thought we lived in at the time when he developed the Buy-and-Hold strategy. The idea that the market is efficient was born in 1965, when Fama published research showing that short-time timing doesn’t work. Lots of good and smart people jumped to the conclusion that no form of timing works. Shiller showed in 1981 that this conclusion was a false one. He showed that long-term timing (price discipline) always works and is always required for investors seeking to keep their risk profile roughly constant over time. Shiller has described the intellectual leap from the finding that short-term price changes are unpredictable to the Buy-and-Hold conclusion that the market sets prices properly as “one of the most remarkable errors in the history of economics.” That’s the core dispute. Buy-and-Hold is rooted in error, the error was revealed by the peer-reviewed research in this field 37 years ago, and now that the error has been covered up for 37 years, the Buy-and-Holders are very, very, […]
But it's during those times when you need to guard against overriding the rational process you went through to build your portfolio. If you want to re-evaluate the portfolio mix you arrived at earlier just to confirm that it's right for you and even possibly make a small tweak or two, fine. But you don't want to let fear and emotions dictate your investing strategy and lead you to make impulsive decisions you may rue later.
You might imagine that Wink and Vaisman are hoping for some real-world impact, given the mental resources they’ve dedicated to this project. But NASDANQ will be a self-sustaining economy, and the value of these memes will only exist internally. Wink and Vaisman see it as a sociological project — NASDANQ will be a visual representation of a very specific portion of our online selves. But the nature of assigning value to the things we share online means that a meme’s value will be taken personally by some. And so the backlash seems inevitable.
The following day, Black Tuesday, was a day of chaos. Forced to liquidate their stocks because of margin calls, overextended investors flooded the exchange with sell orders. The Dow fell 30.57 points to close at 230.07 on that day. The glamour stocks of the age saw their values plummet. Across the two days, the Dow Jones Industrial Average fell 23%.