Happy Blogiversary to Me!

HappyBlogiversaryI have been writing Above the Market for three years as of today: August 1, 2014. I began and still write largely to clarify my own thinking and to force and enforce commitment on my part. Actual readers are a lovely bonus I didn’t expect when I started. Nearly 900 posts and now, well over half a million readers later, I remain astonished at the level of interest Above the Market has received — it is far beyond what I thought possible, much less likely. According to analytics powered by BrightScope, ATM is the #7 advisor blog in terms of readership and influence. Who’d-a-thunk-it? I appreciate each and every reader. Anyone who writes wants to be read most of all.

As always, a few people deserve special mention and thanks.

Tom Brakke (his terrific blog is The Research Puzzle) generously offered outstanding help and guidance before I even had any readers to speak of and continues to offer wise counsel whenever I ask. Tadas Viskanta provided my first distribution (exactly one month in) to the expert community he serves via his blog, Abnormal Returns, which remains the standard for its type. Joe Calhoun upped my exposure tremendously via Real Clear Markets. I am grateful and humbled to be featured often at both of those excellent sites.

According to Investment News, Above the Market is a blog “for all financial advisers to follow.” Thank you, Michael Kitces, for saying so. Financial Planning, the CFA Institute, Financial Social Media, Inomics, Insider Monkey and even The Irish Times have honored Above the Market as among the best of its type anywhere. Wade Pfau has been a great help too (be sure to read his blog and his site if you don’t already). Thanks also to some of the “big boys” (of both sexes) for help and encouragement or for simply liking or linking my work (Jason Zweig, Cullen Roche, Carl Richards, Christine Benz and Barry Ritholtz, among others). Special thanks too to my firm for encouraging this endeavor.

My “top ten” posts this year, based upon reader numbers, follow in order of popularity. I hope you will give them a look (or another look).

  1. Investing Successfully is Really Hard
  2. A Short Introduction to Investing (in 400 words)
  3. The Tragedy of Errors
  4. Something Wicked This Way Comes
  5. Missed It By *This* Much
  6. We Are Less Than Rational
  7. Five Stinkin’ Feet
  8. Get Real
  9. Active Management Required
  10. The Culture of Charade

My all-time “top ten” posts, again based upon reader numbers, follow in order or popularity. I hope you’ll check them out (or check them out again).

  1. Investors’ 10 Most Common Behavioral Biases
  2. Financial Advice: A Top Ten List
  3. Establishing Your Top 10 Investment Default Settings
  4. My Investing Checklist
  5. Math Suckage and Dave Ramsey
  6. Top Ten Ways to Deal with Behavioral Biases
  7. Investing Successfully is Really Hard
  8. Saving Investors From Themselves
  9. We Suck at Probabilities
  10. Is the Yale Model Past It?

Finally, I’d like to focus on the following “not top ten” posts that didn’t get nearly as much attention — sometimes because they appeared before I had many readers — but which I think are worth reading. I encourage you to check them out.

  1. Beguiled By Narrative
  2. Financial Products are Sold, Not Bought
  3. It’s Not You, It’s Me
  4. Just Put the Ball in Play
  5. Gaming the System
  6. The Semmelweis Reflex
  7. Bias Blindness and Political Polarization
  8. Demand for Hitmen and Yield
  9. Luck, Skill and Jim Harbaugh
  10. Librarius Booker, Confabulation and Choice Blindness

To everyone who has read, supported and helped me with this effort: Thank You! I hope three years leads to many more.

Beware Squirrely Risk Assessment

res0814coverMy latest Research magazine column is now available online. Here’s a taste:

In the financial services business, we spend a lot of time dealing with complex products and strategies. And there’s good reason for that. But the heart of good retirement planning—good financial planning—is simple (if hard to do). It’s informed common sense. It begins with starting early and saving aggressively. Then when the markets get ugly, as inevitably happens, it requires that we manage our internal radar to good effect.

This requires courage, the ability to do the hard, right thing even when we’re afraid. The best retirement income strategy in the world is utterly meaningless unless and until one has the resources to put it into place and make it work.

Beware Squirrely Risk Assessment

Above the Market’s Leading Investment Indicators

Leading IndicatorThis fifth edition of Above the Market’s Leading Investment Indicators is for mid-year 2014 and the first since last July. Earlier iterations are here, here, here and here. As I always note, in economics, leading indicators are measures that typically change before the economy as a whole changes, thus providing some predictive power with respect to what lies ahead. For example, the Conference Board publishes a Leading Economic Index intended to forecast future economic activity.

My intent has been and still is to derive some Leading Investment Indicators. Unlike leading economic indicators, these were not designed as short-term or even intermediate-term predictors. The strength of these metrics is as a tool to measure potential real long-term returns. Thus they are better used as longer term indicators of value, risk and expected returns. They in no way should be used as any sort of timing mechanism. The stock market can continue higher or lower regardless of what any metric of valuation is showing. These indicators are designed to be a tool to help shape an overall investment thesis and process as well as to separate short-term and long-term concerns, not to dictate trading decisions.

My previous conclusions suggested that the market was not long-term cheap. I think they are worth re-visiting in light of recent events (or lack thereof) and as we pass the mid-point of 2014. But I won’t bury the lead (or even the lede). Stocks remain rich and the secular bear market continues (despite the long cyclical bull market rally, fueled by the Fed). Fed activity, as intended, makes stocks look much more attractive than they otherwise would — sort of like being the skinniest kid at fat camp.

As I have noted repeatedly, trying to fight the Fed hasn’t been a very productive approach over the recent past. If you’re going to play (and the risks of sitting things out are big too), please be careful and consider putting on a hedging strategy of some sort. So here goes…. Continue reading

The Halftime Report

Q4“To err is human,” wrote Seneca. “To persist in it is diabolical” (Errare humanum est, Perseverare diabolicum). As 2014 opened, pundits expected interest rates and stocks to go higher, with more certainty about the former than the latter. They also expected the economy finally to turn the corner after five years of sub-par performance. Now that the midway point to the year has been reached and stocks, bonds and commodities have all posted gains together for the first time since 1993, my ongoing and deeply held cynicism about forecasts and forecasters has yet again been confirmed. In other words, be leery about fighting the Fed, fade forecasts and be sure to diversify. Continue reading

Framing Annuities More Attractively

FramingMy latest Research magazine column is now available. Here’s a taste.

“The view of the income annuity as anything like a routine first-choice retirement income option remains a good ways off. Too many individual factors can get in the way of using guaranteed income annuities despite their obvious benefits. However, the new research is clear that if and when partial annuitization strategies are regularly offered and recommended, especially when they are well framed, the idea that income annuity usage would be “extremely rare,” as Modigliani observed nearly three decades ago, will no longer be remotely accurate. And that would be a very good thing indeed.”

I would appreciate it if you read the whole column. Indeed, I recommend the entire magazine.

Framing Annuities More Attractively