Active investment management’s weekly magazine for fee-based advisors

The following posts are related to behavioral finance. Scroll down to see more articles.

A case for active tactical investing

Lessons from behavioral economics and fractal mathematics theory help explain why tactical investment strategies can be beneficial in portfolio construction. Editor’s note: Dennis Yamasaki has an extensive educational background in quantitative methods,...

Why goals-based investing makes sense

Financial advisors and investment managers use 21st-century tools to help clients achieve “real” investment success. Financial advisors who use fee-based managed accounts can more effectively help clients meet their investment objectives if they...

They’ve got it backward!

Should buy-and-hold investors be more active and active investors more patient? It was 1969, and my favorite Michigan-area radio station was WKNR. One deejay, Russ Gibb, got a call from a college student saying there was a hidden verse in the Beatles’...

Buy and fold

The only investment approach investors should consider is one they will actually follow. Millions of Americans follow what has become traditional advice to “buy and hold.” This approach might be best summarized by John Bogle, founder of The Vanguard...

Why smart clients do dumb things

Highly intelligent people are often susceptible to making poor investing decisions—behavioral research offers some clues why History books are full of examples of faulty thinking by some of the most intelligent people of their time. News articles remind...

A New Year’s resolution for every investor

Understand how
 diversification should work. The holiday season came and went in a blur, just as it always seems to do. But we are left with fond memories of celebration with family and friends, not to mention the many occasions for traditional...

Helping clients climb down the mountain

Behavioral research has documented many of the obstacles that trip up self-directed investors—the first step in gaining knowledge is often one of self-awareness. As financial advisors, we wear many hats: detective, analyst, strategist, architect,...

Is it possible to just say no to volatility?

Equity investments as an asset class have historically produced the greatest returns over time, but the process is often stressful for investors and their financial advisors. Could a simple tactic allow investors to “just say no” to volatility? Stock...

The power of investing with the trend

A timeless read on understanding and implementing trend-based active investment management strategies Regardless of how firmly you believe in active management, how long you have been managing investments, or what system you use, Greg Morris’ latest...

Up over their skis

Marketing the value of active investment management in an extended bull market. I was recently pitching my active investment approach to a 73-year-old attorney who still has a quite healthy lifestyle and practice. I started the conversation by asking...

A millennial’s perspective

How we really feel about money and investing. Mr. Nick Halle, a history and economics major and junior at the College of Wooster, provided research assistance for me over his winter break. Nick was too young to remember the market correction of the...

How often should you review your investment returns?

The results may surprise you. In my position as president at Flexible Plan Investments, Ltd., at least once a quarter for the last 20 years I have received the same request: “Can you please make daily performance numbers available on your strategies?”...

Women & investing

Is this time different? Why the message of active investment management should resonate with female prospects. The financial-services industry has invested a lot of time, attention, and money over the last five years marketing to women—or at least...

Dissing the investor

The dismaying trend of behavioral finance experts and business media of looking down on investors is unwarranted and counterproductive. Popular financial advice all too often can be summed up with the statement that the average person is incompetent...

Why passive investors get hammered

“If all you have is a hammer, everything looks like a nail.”—Abraham Maslow “If I had a hammer, I’d hammer in the morning, I’d hammer in the evening, all over this land.”—Pete Seeger and Lee Hays, 1949. I don’t know if American psychologist Abraham...

Benchmarking driving you crazy?

How to choose the right yardstick to evaluate active management strategies. Recently I joined a carpool to cut my commuting costs. So far, it has worked out great, but the friend I am travelling with, Jason, is a bit cocky about his skills of getting me...

How do you anticipate the unexpected?

Specific market events are usually unexpected at the time they occur—yet the possibility of their occurrence is almost always known in advance. It always seems to begin the same. A “news flash” scrolls across the lower portion of our TV screens. Or the...

Active management for the mass affluent

Bringing dynamic, risk-managed strategies to all clients. There is a misconception among some financial advisors that active risk management should be reserved for only the wealthiest of clients. Not so. A growing number of financial advisors say they...

Tracking the herd through sentiment indicators

“Men, it has been well said, think in herds; it will be seen that they go mad in herds, while they only recover their senses slowly, one by one.” – Charles Mackay, Extraordinary Popular Delusions and the Madness of Crowds One of the more fascinating...