Archive - June 2010

1
Have Your Cake and Eat it To? Risk vs. Return
2
The Demise of an Investment Portfolio – Emotions and Market Timing

Have Your Cake and Eat it To? Risk vs. Return

What is more important, getting the most return, or not losing anything? For many, getting the highest possible return is the biggest goal. They obsess over return. But higher returns warrant more risk, and more risk can have a hidden villain not always discovered until it is too late. The villain – geometric return, or more correctly termed in statistician land – geometric mean.

According to Wikipedia, Geometric Mean is a type of mean or average,…similar to the arithmetic mean, which is what most people think of with the word “average”, except that… the geometric mean of a

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The Demise of an Investment Portfolio – Emotions and Market Timing

Forecasting the short-term movement of the stock market and trying to time the market is fruitless.  As in all areas of our lives, we can’t control what life throws at us but we can establish a defensive position to best deal with a variety of outcomes.  When it comes to our investments, we accomplish this through diversification, dollar cost averaging, maintaining an emergency fund and staying the course.   We need to fight the natural inclination to make financial decisions based on emotions.   Don’t forget that the stock market is counter-intuitive.  Generally, the best time to buy is when things seem …

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