A Rather Modest Fiduciary Proposal Draws Fire

In a recent speech, President Obama announced support for a Department of Labor initiative to impose a fiduciary duty on those who give advice about tax deferred retirement investments such as IRA accounts.  It is a modest proposal. Judging by the howls emanating from an industry fearing it could cut into profits, though, you might […]

Read full story Comments are closed

To Be a Great Negotiator You Must Get Fully Prepared

There are a great many practices, behaviors, and skills that set great negotiators apart from more typical bargainers. Indeed, enough to fill an entire book.    Probably the single most important of these, however, is preparation.  To put it plainly, the best negotiators prepare fully and carefully for any important negotiation. It is no surprise […]

Read full story Comments are closed
Negotiating Investments

Investing is a Series of Negotiations

Most of what you do in your financial life involves negotiating. In particular, investing is a series of negotiations. As an investor, you seek a deal in which you will exchange payment for some instrument that (hopefully) will appreciate in value. This may be a stock (an ownership interest in an enterprise), a bond (debt), or some sort of commodity (a thing that has value). Or the object of the deal may be some derivative or combination of these things.

Read full story Comments { 0 }
Mutual Fund Selection

Ever Wonder How Investment Advisors Choose Specific Funds?

I sometimes ponder how brokers and advisors choose this fund over that one.

After all, economic theory suggests that they all tend to perform in tandem with others investing in the same asset class. In such a case, the lion’s share of performance variation will be attributable to how much is charged to run the fund. Absent the advisor’s own pecuniary interests, I wonder if the choice isn’t totally arbitrary. Sort of akin to reaching into a barrel of monkeys and pulling out the first one you grab hold of.

Read full story Comments are closed

Avoid Investments That Do Not Trade

When contemplating a potential investment, how can you know if it is fairly priced? Such a determination is critically important since even the best company will prove a poor investment if its stock is purchased too dear. Paying a fair price for an investment vehicle is just as important as not overpaying for a house, […]

Read full story Comments are closed

Don’t Choose Between Investments, Buy Them All

If the expected return from two similar stocks is the same, how should an investor decide in which one to invest? The best answer is she shouldn’t. In most cases, the wiser choice is to buy some of each. The two investments will offer the same theoretical expected return but with lower overall risk. This […]

Read full story Comments are closed

Comparing the Expected Return on Stocks

It seems safe to assume that almost no two individual stocks will bring the exact same return to an investor over the next decade. Those differences in return, however, will be explained by unpredictable and unexpected events that will occur in the future. Based only on what is known right now, the stocks of two […]

Read full story Comments are closed

How an Offer You Hope to Refuse Can Increase Your Power

Strengthening your best alternative is the surest way to increase your negotiating power. This concept may seem counterintuitive; after all, our best alternative to the current deal is the offer we anticipate turning down. We hope, instead, to fashion the deal currently being discussed into one that best meets our needs and interests. Why work […]

Read full story Comments are closed

Alternatives Power the Best Negotiators

Before studying negotiation, I thought of “alternatives” and “options” as synonymous. To students of the process, though, these two words mean very different things. Options are all the ways a deal can be structured. Should you pay up front or over time, include the plantings or take them along, repair the fence or lower the […]

Read full story Comments are closed

The Best Use of Your Social Security Benefits

Social Security benefits form an important part of your overall retirement planning. Even the most skilled financial planners, though, have different understandings of how best to utilize this important resource. Some ways of thinking about, and deploying, social security benefits may be wiser than others. For many people, the “highest and best use” of social […]

Read full story Comments are closed