Over the past several years, my portfolio has grown considerably through a combination of good returns plus regular savings and contributions. These days, I’m comfortably in the Coast FI stage of my financial independence journey, where my portfolio is large enough that it should grow enough to cover my expenses at traditional retirement age, even if I don’t save another penny again (note that while I am at Coast FI, I’m still saving and investing […]

There are many ways in which individual investors can get scammed within the financial industry. Some of these scams are well-known. Consider the classic pump and dump. You join a stock picking “community” and the people running it recommend a stock. You buy it and the price goes up. Seeing such a quick return, you buy more. Then, all of a sudden, it crashes and you lose everything. Unbeknownst to you, the people running the community sold their shares (to you) and got out on the way up. But, there are also those scams that are less well-known. These are what I’m going to be discussing today. Because it’s very easy to deceive in the world of financial services and I’ve seen just about every trick in the book.  To begin, let’s look at when outperformance isn’t really outperformance. You Outperformed Then, But How About Now? One way that active asset managers can deceive individual investors is by using historical performance charts. There is nothing wrong with historical performance charts themselves, but if you don’t use them properly, you could misadvertise your actual results. In some cases, a historical performance chart can show continued outperformance even when that outperformance no longer exists. Benn Eifert recently tweeted an example of this as an investment brain teaser (see below): Exercise for the group: your boss shows you this chart and says, “hey shouldn’t we be selling 10% OTM 1-month calls on all our stocks, won’t we get higher total returns?” What’s the problem with his reasoning? Think about Benn’s question for a few seconds before reading my take below. The core problem with this reasoning is that the performance chart above uses a linear scale on the y-axis. And, unfortunately, a linear scale won’t accurately show relative performance differences over time. In fact, such a scale can make it seem like the performance gap is growing over time even when the strategies are performing the same! Run the following thought experiment and you will see what I mean. From the last point on the chart above give each strategy a 100x return (no relative difference in performance) over the next 40 years. If you did this, the OTM strategy would have a final value of ~$154k and the S&P one would have a final value of ~$107k. Visually it will look like there is a growing divergence in performance between these two strategies though we know that this can’t be the case. Their relative performance is the same (they both went up 100x), yet it looks like one is outperforming the other. What gives? The visual divergence is merely an artifact of a prior period of outperformance. In this case, the prior period of outperformance occurred from 2000-2012. During that period the OTM strategy outperformed the S&P only strategy, but since then, the OTM strategy has actually underperformed slightly. Unfortunately, it’s difficult to figure this out simply by looking at the chart above. How do you fix this issue? There are a

If you want a white T-shirt, someone is always prepared to sell you a ‘better’ white T-shirt. For you sir / madam, may I suggest a Lora Piana white jobbie for a mere £1,795?1 How superior can this seventh wonder of capitalism be? Is Lora Piana’s T-shirt really 32,536% better than Next’s Basic Crew Neck, currently yours for just £5.50? We grizzly frugalists may scoff – but we face a similar face-off whenever we’re tempted by […]

Rick Ferri recently interviewed me for the Bogleheads on Investing podcast, to discuss my book After the Death of Your Spouse: Next Financial Steps for Surviving Spouses, as well as the overall topic of serving as an executor of an estate. You can find the episode here: Bogleheads on Investing Episode 79: Mike Piper Discusses Being the Executor of an Estate Other Recommended Reading New Information from the SSA about Timing of Benefit Increases for […]

It’s nice to be able to have dividends and distributions come into your account and even nicer not having to withdraw it. Don’t interrupt compounding unnecessarily! Actually I am not using the money that I am receiving in dividends right now, just allowing the cash … Read moreFebruary 2025 Dividend Income Update The post February 2025 Dividend Income Update appeared first on Genymoney.ca.

🎙️Episode #389 – Are real estate investors really to blame for the housing crisis? Some say they’re driving up prices and squeezing out homebuyers—but is… The post Real Estate Investors Caused the Housing Crisis! appeared first on Coach Carson.

Meglio investire sui massimi o aspettare? Quali strategie puoi adottare per entrare sui massimi? Come vincere la paura? Stai pensando di iniziare ad investire in borsa ma i mercati sono sui massimi? Cosa fare? Investire sui massimi o aspettare che i mercati scendano un po’? Guardare i grafici e vedere che i mercati americani sono praticamente raddoppiati rispetto al 2020 effettivamente farebbe dubitare chiunque: Erano i prezzi del 2020 ad essere bassi? O sono i […]

The stock market outlook changed to a downtrend last week after encountering heavy selling pressure