Investing is rarely as simple as it seems and there are all kinds of wisdom out there in everyday life, if we just pay attention.
Investing Dangers for Smart People
Have you ever gone online to look-up your medical symptoms in an effort to self-diagnose?
Financial advisor David Edwards says it can be the same with financial advice, particularly with some of his smartest clients. For the most part, his clients let him do his job, but every once in a while he gets some strange requests that sound a lot like self-diagnosis.
Many of his clients also like playing poker on the weekends with their buddies, Edwards points out. But ask them about playing with the pros in Atlantic City and there is a healthy respect for their own limitations. Tongue firmly planted in his cheek, Edwards writes:
“You don’t have an edge in poker, but you think you do have an edge in stock picking, which is 10,000 times more complicated than poker?”
Read more: The Investing Danger That Smart People Face.
Do women investors benefit from being more cautious?
According to BlackRock’s Investor Pulse survey, 55 percent of men described themselves as being “in control” of their financial future, compared to just 38 percent of women. Similarly, 54 percent of men say they are confident in their savings and investment decisions, while only 34 percent of women say the same.
However, data from SigFig (a portfolio tracking tool) showed that the typical female investor outperformed the typical male investor by 12 percent in 2014, leading to the observation that “male investors have confidence, but that confidence is often misplaced.”
The article goes on to explain how men can learn from women investors’ more cautious approach. For example, men trade more frequently, which according to one report led to lower returns compared to investors with less portfolio turnover.
Read more: What Men Can Learn From Female Investors.
Don’t invest like the Seahawks play football
The NFL playoffs and Super Bowl XLIX are now in the history books, but this post by Barry Ritholtz is timeless.
He observes that in the lead up to the Super Bowl, Green Bay had a “methodical statistical approach,” while Seattle “looked like the Harlem Globetrotters of football.” Seattle got lucky and made it to the big game. But the luck ran out for Seattle in the Super Bowl matchup with the New England Patriots.
His lesson for investors? Just because something is working doesn’t mean you push it, or eventually you will lose the game.
Read more: Don't Invest Like the Seahawks.