December 19, 2014

What Investors Really Want

What Investors Want

“In reflecting on our experiences as advisers and investors, we’ve come up with what we believe are the key and often unspoken wants and needs of our investors.”

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Mailbox: Which States Allow Prize-Linked Savings Accounts?

The Drive of the Lottery

There are thirteen states so far. Does your state allow them?

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Bogle’s Best Advice: Don’t Peek

Don't Peek

When it comes to finances, just shut your eyes and keep them closed.

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If You Wouldn’t Buy It, Why Keep It?

Lego Shop

The stock market is one of the few places that when things go on sale we are less likely to want to buy.

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Advisors Focus On Panic Prevention In Volatile Market

Panic Button

Our brains are not wired well for handling the fluctuations in the stock market. Could a financial advisor help?

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Driving Emotions From Your Investment Process: A 12-Step Program

Brain Scan

Don’t let short term volatility ruin a brilliant long term investment strategy.

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How To Save Wealthy Clients From Themselves

Brain Scan

“Emotion can undo the best-laid financial plans.”

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Advisors Must Stop Client Self-Destruction

Koala Bear

Sometimes the best advice is when a competent advisor tells you that you are wrong.

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Active Management Has An 82% Failure Rate

Active management failure

Managing investment assets requires managing investor expectations.

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Is A Financial Apocalypse Coming?

The Disaster Diaries by Sam Sheridan

Should you buy as much gold as you can get your hands on?

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The Blank Slate by Stephen Pinker

The Blank Slate by Stephen Pinker

Although it would be wonderful if we lived in a world that lived up to the ideals of the Utopian Vision, we believe along with Stephen Pinker that reality supports the Tragic Vision.

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The Driver of Future Behavior

Brain Scan

Investments consistently outperform investors.

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Thou Shalt Not Covet Thy Neighbor’s Tesla

tesla_t

Since it is inevitable that each group of friends will represent a spectrum of financial capacity, healthy relationships require that all be prepared to manage these pressures.

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The Optimist’s Antidote

RIP best ideas

Behavioral psychology research suggests that you should send your best ideas to the grave.

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Improve Your Financial Decisions (Book Review)

lazy brain_t

Behavioral psychology is uncovering many common mental lapses and offers new ideas for improving decision making in light of these heuristics.

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The 24/7 Financial News Media Machine

Financial Noise

“Here are a few of the things we’re worried about – and the ways in which our firm is preparing for them.”

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Recent Market Advances Fail to Overcome Mental Accounting

satisfactionsanp500_t

The S&P 500 has nearly doubled in the last four years. Yet many investors are left feeling more disillusioned with their investments than ever before. Some of this discontent can be combated by understanding the psychological effects of market volatility.

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Making Peace with your Money Past

money peace

Money plays such a personal role in our lives that most people learn early on to keep their financial affairs a secret. These shadows promote many different varieties of financial pathologies and distress.

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The Smart Money Philosophy of Doug Lennick

Roulette Wheel

Follow a philosophy so that there is always a smart place to get money

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Financially Savvy Kittens on the Definition of Success

BottomMeasurement_t

This kitten measures success from the bottom not the top. Be more like this kitten.

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Marshmallows and Investing?

marshmellows_t

Parents take note: Research on delayed gratification shows connections from children through adulthood.

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How are foreign stocks doing compared to stocks in the United States? Fall 2012

The United States of America

Sometimes the medium term trend seems to weigh more heavily in our minds than the long or short term trends.

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Suddenly Wealthy

Windfall

Studies show that onetime windfalls can actually impoverish you. They make you feel rich, which inevitably leads to overspending. But wealth is what you save, not what you spend.

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A grown-up discussion on income and wealth inequality in America

Girl with tongue

Most work toward equality of results impoverishes everyone.

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Stress Is Not Your Enemy

Cat On Mailbox

How often do you intentionally push yourself to discomfort? Do you think the best retirement is relaxing and recreating? Think again.

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Video: The Benefits of Having a Financial Advisor

David Marotta Video Green Background

If you want to get in shape and need push in the right direction, you hire a personal trainer. If you want advice and a push in the right direction to be in good financial shape, hire a financial advisor.

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Women are more afraid of becoming “bag ladies” than men

Bag Lady

Women are more afraid of becoming “bag ladies” than men, and it makes them approach investing and saving for retirement differently, assuming they have managed to tackle either of those chores.

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Countering Resistance

Castle With Moat

Client resistance is an inevitable part of the financial planning process. It’s a sign the advisor is doing his or her job.

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Radio: Grow Rich Slowly: The Four Secrets of an Automatic Millionaire

Marotta on the Radio

Listen to David John Marotta’s interview on growing rich slowly: the four secrets of an automatic millionaire

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Best Marketing for a Small Business

Search Engine Optimization

For a small business, marketing and advertising seeks an answer to the question “How will prospective customers find me?” Most small businesses would benefit from enhancing their website presence by blogging and social media connections.

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Economic Lessons from Farmville

Farmville

To interest me, a game must have a simple but thought-provoking premise that allows for deep strategy. I’d never played Farmville but decided to recently because the parent company, Zynga, is going public this Thursday, December 15, 2011.

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A Wealth of Satisfaction

Purple Grape Vine

True life planning begins when you realize you are unique. There will never be another you in the history of the universe. Your calling is yours alone. Understanding yourself is the first step in managing your financial affairs to support your life plan.

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Three Reasons to Give Thanks

praying hands tatoo_t

Here are three reasons to make time for thanksgiving during this national holiday weekend.

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Economic Lessons from “Settlers of Catan”

Catan

What makes Catan particularly interesting is that just producing the most resources is not sufficient to win the game. Knowing what mix of resources you need to meet your objectives is critical.

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Economic Lessons Learned from Chess

Chess Prodigy

I love strategy games. Many people dismiss games as a waste of time. But at their best they teach principles of cause and effect that we can use as paradigms for real life.

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Stop Telling Yourself These Three Financial Lies

Lemon Basket

Most of us rationalize why we can’t get our finances together right now. Many Americans prolong these excuses during their entire working careers. Here are three lies you must stop telling yourself in order to build a solid financial foundation.

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Test Before You Invest

$ Questions

Q: I am 53 years old and have never invested in the stock market. I have inherited $150,000 from a family member, and my son is recommending that I invest this money in the market. Do you agree?

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Video: The Four Deadly Sins of Investing

Marotta Youtube

In both good times and bad times, investing is really about managing your emotions. If you want to be an investor, you have to grow to understand not only the relationship between risk and return, but also your own reaction to it.

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Video: University Students and Credit Cards

Marotta Youtube

Every University student knows they should have a credit card. You have to have a second form of ID on many financial transactions. You have to have one to establish good credit. And, the more you use them, the more you will accrue bonus points toward cash, mileage credits and various “free gifts”. P.T. Barnum said, “There’s a sucker born every minute.” But it doesn’t have to be you.

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Financial Time Perspective

Financial Time Perspective

Philip Zimbardo’s latest book, “The Time Paradox” suggests that understanding your own time perspective may help you unlock the secrets of financial freedom. In other words, how we think determines who we are and what we do.

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Behavioral Finance: Patience Is Its Own Reward

Brain Scan

To process financial information, our minds often attempt unwise shortcuts. By understanding behavioral finance, we can limit the information we use and keep our decisions balanced and on track.

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Behavioral Finance: Herd Mentality

Brain Scan

One of the early studies on herd mentality was the Solomon Asch experiments in the 1950s. The setup was a mock vision test. In reality, all but one of the participants were actors, who after a few correct answers started agreeing unanimously on a wrong choice.

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Behavioral Finance: Overconfidence

Brain Scan

Think of confidence as a continuum: Lack of confidence is paralyzing, self-confidence is good, but overconfidence is deadly. Successful investors seek to find a balance between rashness and timidity. Understanding the psychology that causes us to act overconfidently will help you avoid it.

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Behavioral Finance: Mental Accounting

Brain Scan

The essence of successful financial planning is using your money to meet your life’s goals. Curiously our minds tend to fall prey to the fallacy that behavioral finance calls “mental accounting”.

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Behavioral Finance: Anchoring

Brain Scan

Our first reaction to a complicated situation, usually instinctive, often does not serve our best interests. One heuristic that the brain uses to solve complex evaluations is to make an initial guess and then adjust from that point. This mental process is called “anchoring.”

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Loss Aversion

Brain Scan

Psychologists suggest we feel a loss about 2.5 times as much as an equivalent gain. Even with a brilliant investment plan, it takes diligence to overcome our emotional biases and avoid making investing mistakes.

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University Students: Getting Sucked Dry by Credit Cards

Credit Card in Jeans Pocket

Last week we listed the ways university student are enticed into using credit cards. This week we will examine the economical impact of those initially small and convenient monthly payments.

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University Students: Getting Suckered in with Credit Cards

Credit Card in Jeans Pocket

Every University student knows they should have a credit card. You have to have a second form of ID on many financial transactions. You have to have one to establish good credit. And, the more you use them, the more you will accrue bonus points toward cash, mileage credits and various “free gifts”. P.T. Barnum said, “There’s a sucker born every minute.” But it doesn’t have to be you.

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Familiarity Breeds Concentration

Brain Scan

Investors have been told, “Invest in what you know.” While this may have been a good adage for avoiding investing in companies with no business models, it is a poor rule of thumb to use when building diversified portfolios.

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