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The Importance of Investing with 'Appropriate Fear'

by: Lawrence Hamtil  on Tuesday, August 30, 2016

Gregg Popovich, the coach of the NBA’s San Antonio Spurs, is famous for reminding his players to approach each playoff opportunity with what he calls “appropriate fear.”  This fear that Popovich describes is not the kind of panic-inducing fear that can lead to unforced errors, nor is it the kind of obsessive fear that can lead to “paralysis by analysis.”  Rather, what is meant by the term “appropriate fear” is a kind of healthy skepticism of one’s own preparedness and focus, as well as fear of your opponent’s capabilities, so as not to underestimate him and be rudely surprised during the competition.  In other words, playing with appropriate fear means to play with humility and to have an appreciation of the potential pitfalls you will face as you try to reach your goal. Read More

Foreign vs Domestic Equity Performance by Sector

by: Lawrence Hamtil  on Thursday, August 25, 2016

Since the prior market peak in October of 2007, US equity markets have outperformed the vast majority of foreign equity markets.  In fact, while $10,000 invested in the US at the end of October 2007 would be worth more than $16,000 for a total return in excess of 60%, the same amount invested in the MSCI EAFE (the standard benchmark for developed foreign market equities) would still be underwater, despite reinvested dividends*: Read More

Are Low Yields Really Responsible for Low Vol's Success?

by: Lawrence Hamtil  on Tuesday, August 23, 2016

There has recently been a steady stream of financial articles declaring that the main driver of the excess performance of traditionally 'defensive' sectors such as consumer staples and utilities is solely attributable to the decline of interest rates to near-record lows.  For example, in Monday's Wall Street Journal, columnist Justin Lahart wroteRead More

Two Similar Companies; Two Very Different Results

by: Lawrence Hamtil  on Thursday, August 18, 2016

It is conventional wisdom in the financial services industry that clients should harvest their tax losses each year by selling their positions that are underwater.  While this is generally a prudent strategy, there are a few legitimate reasons why this may not always work out in an investor's long-term favor.  Keep in mind that in order to avoid a 'wash-sale,' (which would nullify your ability to claim the loss on your tax return) you cannot have bought the security (or a "substantially idential" one) at least thirty days before the sale, and you cannot buy it back until at least thirty days after the sale.  Given this limitation, the possibility exists that during the exclusion period, the security that was sold could appreciate substantially, thus leaving the investor with perhaps an expensive opportunity cost. Read More

Q&A With The Wall Street Journal's Spencer Jakab

by: Lawrence Hamtil  on Tuesday, August 09, 2016

Spencer Jakab is deputy editor of the Wall Street Journal’s Heard on the Street column, and is the author of a great new investment book, Heads I Win, Tails I Win: Why Smart Investors Fail and How to Tilt the Odds in Your FavorA former highly-regarded equity analyst and now a journalist at what I consider the premier business newspaper, Mr. Jakab has a wealth of experience in multiple facets of the financial industry.    Read More

The Price of Prestige

by: Lawrence Hamtil  on Sunday, August 07, 2016

In modern conversation; we exchange words like fans might exchange collectibles:  eagerly, and without much grasp of their true value as symbols.  Generally, we seem not even to have a vague sense of the true meaning of words.  In our worship of the utilitarian, we have taken what we have needed from our ancestors' languages, and we have dispensed with the rest.  However, ideas and the words we use to express them have consequences, and our not pausing to apprehend this has cost us. Read More