Often the greatest impact from events occurs at the margin. My theory is that small incremental changes can cause disproportionate outcomes.   For example, just a few thousand people in a handful of states decided the 2016 Presidential election for a nation of 330 million people. In economics there is equilibrium when supply equals demand. That said, when either supply or demand shifts – even just a little – there can be a huge change in prices. &nb…

I don’t think people always believe me when I tell them that investing is simple. It really is.  It’s just not easy. The process of buying and maintaining investments doesn’t take much effort or knowledge.   There are great investment products available like index funds and ETFs.   Discount brokers like Vanguard, Fidelity, and Schwab do most of the implementation work for free.   Transaction costs have also been driven down to ze…

Buckets of rain Buckets of tears Got all them buckets comin' out of my ears These lyrics from Bob Dylan’s classic Blood on the Tracks album come to mind when I hear people talk about the bucket system for portfolio management.  Although not a new concept, I’ve been seeing more articles lately about this technique whereby an investor keeps two to five-year’s worth of income in a liquid cash account (bucket) for spending. One or more other buckets would be…

Fidelity Investments has sent a jolt through the investment world with its release of four new mutual funds with zero expense ratios.   That’s right – they’re free!   The Fidelity Zero Total Market Index Fund (FZROX) has no operating expense ratio and no minimum investment requirement either.  This means that anyone with any amount of money can invest for free.    Three other zero-fee index funds are also available covering t…

I recently encountered one of the best podcasts that I’ve ever heard on the subject of investing.   In a re-broadcast from Freakanomics Radio, Stephen J. Dubner takes a look at a phenomena that I’ve wondered about for a long time.    In The Stupidest Thing You Can Do With Your Money he essentially asks the question, “why are so many people willing to pay for subpar performance?” The assertion of the episode is that active management remain…