CALDEIRÃO DE BOLSA

LTCM Escreveu:

AutoMech Escreveu:O LTCM quis guardar o resto do artigo para ele

A ideia era, a exemplo de outros tópicos, ir "postando" uma "regra" de cada vez.

AutoMech Escreveu:O LTCM quis guardar o resto do artigo para ele

Here’s what I (eventually) learned:

The daily stock market news is just noise. Distracting, disconcerting, and to the extent you act on this information rashly, it can be deadly from a financial perspective. (Fortunately I didn’t have trading authority so this didn’t happen with our fund, but it happens every moment of every day to individual investors.)

Investing in stocks is investing in a business. What CEO or business owner calculates the book value of the company on a daily basis? It would be a complete waste of time. The CEO or business owner focuses their time on building the business, studying the industry and the competition. So why would investors care about the daily price? It is very misleading. The daily stock market news cycle is partly to blame for the short-term focus.

Even respected business journalist Maria Bartiromo, who gained fame by reporting on the floor of the New York Stock Exchange, states that investing for the long term is the best way to create wealth, and that watching reports such as the ones she gave for years makes little difference. Gary Belsky, former financial journalist and author of Why Smart People Make Big Money Mistakes and How to Correct Them, told us that he left financial reporting to become an editor at ESPN because once he understood behavioral finance he no longer felt right about reporting on the daily or even monthly goings-on in the market.

Here are three ideas on where to redirect your attention:

Watch the news, not the market.
Keeping up on general economic trends as well as industry news on the investments you own is a much better place to spend your time than watching the 24-hour news cycle. As an investor, I have always been interested in how business leaders think. To me, learning about their leadership style and focusing on where they can grow the business is what is important. The information gathered from watching industry and company specific news is much more valuable in making investment decisions than watching an endless stream of ticker symbols.

Don’t follow the herd.
The average investor gets in at the wrong time and, of course, follows that with selling at the wrong time. In fact, there used to be a popular indicator of when to buy and sell called the “odd lot” theory. The premise was that small investors who normally trade in small amounts of less than 100 shares often made poor investment decisions. Today, small investors generally trade in mutual funds, but this theory is very telling as you’ll see in the next point. Remember the herd is watching the same cable TV program you are.

Buy and hold – don’t time the market.
According to a Dalbar study, access to market information may actually hurt the returns of the individual investor. You would think with more information investors would have better returns and beat the market, but that was not the case. According to the study, which covered the 20-year period from 1988-2007, the S&P 500 had annualized returns of 11.81%, while investment-grade bonds returned 7.56%. The average equity fund investor had returns of only 4.48% — worse than Treasury bills which returned 4.49% annually for the same time period. The reason: Most individual investors are overly sensitive to market swings and end up buying high (feeling they need to get in the game after seeing the market rise significantly) and selling low (out of fear that the market is going to plummet further).

Investors would be better off ignoring the day-to-day market changes and studying the words of great investors like Warren Buffett, David Dreman, and Benjamin Graham. Instead of news anchors reporting the daily market quotes, I’d like to see them reporting successful financial strategies. With the poor state of financial literacy in this country, what we need is less “noise” and more helpful information that people can actually use.

Liz Davidson is CEO of Financial Finesse, the leading provider of unbiased financial education for employers nationwide, delivered by on-staff Certified Financial Planner™ professionals.

Pata-Hari Escreveu:Quem é o senhor em causa?

By LIZ DAVIDSON

In the late 90s, I ran a hedge fund.

Correction—I was the CEO for the hedge fund, responsible for marketing the fund and growing the business. I was not the portfolio manager and I had no responsibility for buying and selling the investments.

Despite that fact, and despite the fact that our fund followed a long term “buy and hold” strategy where we committed to selling less than a quarter of the investments each year and aspired to keep portfolio turnover below 10%, I had CNBC on constantly—watching the latest market news, obsessed with how stock price changes impacted the value of our portfolio.

I look back now and wish I could get those hours back. I wonder how much more effective I would have been if I shut the TV off and redirected my attention to things that really mattered, where I had some degree of control over the outcome.

Would I have been a better, wiser, more balanced leader if I calmly accepted that the value of our portfolio would change constantly—sometimes randomly—based on rumors, large trades, and missed “whisper numbers” (what the “street” thinks the earnings will be despite the fact that the management team estimated lower—a strange game of poker where you think you know the cards better than the person holding them)? I think so.

One of our investors said it best when I asked why he never called me when the market was down as most of our other investors did. “What does the value of the Dow on Tuesday at 10:58 AM have to do with my long-term financial goals? Absolutely nothing.”

Here’s what I (eventually) learned: