Guardrails & Probability of Failure Nonsense
Perhaps the most common tool used to discuss retirement planning, and especially planning withdrawals from a retirement account is the use of Monte Carlo Simulation. In fact, you can find…
Investments, Retirement Planning, Wealth Management
Normal Doesn’t Mean “Normal”, it means normal
I ran across an important quote today that is particularly enlightening about attitudes towards investment returns. It relates to the Laplace-Gaussian distribution, but before I Explain further, ask yourself a…
Investing has Been Solved (Sort of) – Part II
Let’s get the idea that will enrage most people out of the way first. When it comes to long term investing (and there is no other kind) our simple rule…
Investing Has Been Solved (Sort of) Part I
Before you freak out and scream – “no it hasn’t you idiot, my situation is different,” let me explain that you are absolutely right, but that has nothing to do…
More 4% Nonsense
Whatever you do in this space, don’t ever admit that the 4% rule is nonsense. If you do, you will be publicly flogged and left for dead for being such…
Risk and Investment Returns are Positively Related
I begin with a beautiful illustration from William J. Bernstein’s book, The Four Pillars of Investing. I will quote him directly here to be sure to not take credit for…
Expected Economic Growth and Stock Returns are NOT Related Even Though They Are
In MBA courses on Supply-Chain Management we often conduct an exercise that we call the Beer Game. In this game we set up a mock supply chain where there are…
Incentives Matter
Let me give credit where it is due up front. This blog title is not from my own mind. I borrowed it from a number of places including a presentation…
Most Funds Do Not Beat the Market
When most people read this statement they interpret it to mean that most Mutual Fund returns are below the return of a common benchmark such as the S&P 500 Index.…
Time in the Markets Beats Timing the Market
I recently received another one of those “Free Steak Dinner” invitations, where some financial advisor shares his thoughts about retirement planning. Now, I know from experience that this is either…