A Lack Of Critical Thinking and Objective Analysis

Recently I have alluded to some serious problems with the Walker Fire Department and while I am not going to get into specifics until it is over (of course it may never end) there are human behaviors at work that impede success and these behaviors can also impede investment success. There are certain things in our lives where emotion and ego work to our detriment. Ego has no place on a wildfire. Ego often prevents investors from having the objectivity to recognize when something is wrong be it process, macro opinion or an investment selection. An incident (fire or medical) is essentially a problem to be solved. Solving means being effective and safe. If the context of investing is some long term goal like retirement, that too is a problem to be solved and solving it means being effective and safe. The more that emotion, ego and other insecurities encroach on these tasks the greater the likelihood that something will go wrong. One problem at the fire department and in many financial plans is the inability to understand this concept and even more difficult is having the objectivity and introspection to realize when behaviors are counter productive. I hope to resume normal blogging tomorrow. The picture is of the Bay Bridge from Telegraph Hill taken with my not-so-smart...

Sunday Morning Coffee

My brother and I are putting the wraps on a pretty good sports weekend. Two baseball games at AT&T and two futbol games yesterday at Cafe Trieste (Uruguay win, USA loss). Not much to say today about the stock market, I haven’t even looked at Barron’s yet, but we had a pretty interesting philosophical discussion in between World Cup games. First from my friend from Walker who said “you can figure it out now or you can figure it out later but if you can figure it out now you will be much happier.” Larry and I were talking about demographic issues with baby boomers and gen X-ers and the differences between the two. Larry made a point about aging that has never occurred to me. One problem people have with turning 40 can be the sense of getting to that age and lamenting the various things not achieved or other types of failures that some folks can have. These can be monetary and also be tied to not being where you want to be in terms of all sorts of personal issues. While there won’t really be any solutions here, the importance of getting to where you want to be personally will make all the money stuff written about here and on other sites you read much easier to achieve. FWIW if you wish away the week to get to the weekend then look for a new job. In this economy it might take much longer than you would hope but even the search can be a positive. The other thing I would bring up is some sort...

Sunday Morning Coffee

My brother and I are putting the wraps on a pretty good sports weekend. Two baseball games at AT&T and two futbol games yesterday at Cafe Trieste (Uruguay win, USA loss). Not much to say today about the stock market, I haven’t even looked at Barron’s yet, but we had a pretty interesting philosophical discussion in between World Cup games. First from my friend from Walker who said “you can figure it out now or you can figure it out later but if you can figure it out now you will be much happier.” Larry and I were talking about demographic issues with baby boomers and gen X-ers and the differences between the two. Larry made a point about aging that has never occurred to me. One problem people have with turning 40 can be the sense of getting to that age and lamenting the various things not achieved or other types of failures that some folks can have. These can be monetary and also be tied to not being where you want to be in terms of all sorts of personal issues. While there won’t really be any solutions here, the importance of getting to where you want to be personally will make all the money stuff written about here and on other sites you read much easier to achieve. FWIW if you wish away the week to get to the weekend then look for a new job. In this economy it might take much longer than you would hope but even the search can be a positive. The other thing I would bring up is some sort...

The Big Picture For The Week Of June 27, 2010

James Picerno has a post up exploring what the proper allocation to emerging market equities might be. He explores whether to go by market cap weight which would be 12% or maybe some other measurement that might yield a different number. Here is a thought; the entire conversation needs to be thrown out and a completely different approach needs to be taken. Perhaps the title ’emerging’ needs to be chucked. In going country by country in building a portfolio it seems logical that one would pick countries that have the best economic fundamentals. From there one could take volatility, not risk, characteristics into account in determining weighting and how to blend various countries together. Based on various measures of indebtedness one could conclude that Brazil is in much better shape than the US or big Western Europe. Historically US based investors are pretty comfortable with 100% in US equities. I doubt too many people would be comfortable with 100% Brazil instead but maybe they should be. Not really of course but if you believe the fundamental story is better in Brazil than the US then why would you have more US than Brazil? This becomes an interesting question. Not every healthy country is as volatile as Brazil, Norway as an example. Instead of how much to invest in emerging markets the question should maybe change to how much each country, how much to countries more volatile than the US and how many less volatile (or maybe equally volatile). The Sox lost last night but it was a good game. It was very cold the entire game but did not...

The Big Picture For The Week Of June 27, 2010

James Picerno has a post up exploring what the proper allocation to emerging market equities might be. He explores whether to go by market cap weight which would be 12% or maybe some other measurement that might yield a different number. Here is a thought; the entire conversation needs to be thrown out and a completely different approach needs to be taken. Perhaps the title ’emerging’ needs to be chucked. In going country by country in building a portfolio it seems logical that one would pick countries that have the best economic fundamentals. From there one could take volatility, not risk, characteristics into account in determining weighting and how to blend various countries together. Based on various measures of indebtedness one could conclude that Brazil is in much better shape than the US or big Western Europe. Historically US based investors are pretty comfortable with 100% in US equities. I doubt too many people would be comfortable with 100% Brazil instead but maybe they should be. Not really of course but if you believe the fundamental story is better in Brazil than the US then why would you have more US than Brazil? This becomes an interesting question. Not every healthy country is as volatile as Brazil, Norway as an example. Instead of how much to invest in emerging markets the question should maybe change to how much each country, how much to countries more volatile than the US and how many less volatile (or maybe equally volatile). The Sox lost last night but it was a good game. It was very cold the entire game but did not...