Barry Ritholtz: Market Performance Isn’t Due to President

In a recent Bloomberg article, the co-founder and chief investment officer of Ritholtz Wealth Management debunks the notion that the stock market’s record performance is tied to hopes around the president’s policy agenda. Ritholtz argues, “First, there is the tendency of the markets to ignore the dysfunction in Washington—as they have for most of the past decade. If the markets are really rallying on expectations of good things from the government, then the inability to get anything done in the past few years should have thrown them into reverse.” He goes on to explain some other human brain tendencies, including […]

Finding Your Edge a Key to Investing Success

By John P. Reese The mathematician Ed Thorp figured out how to beat Las Vegas casinos at blackjack and baccarat and they didn’t like it. But the MIT and University of California Irvine professor didn’t get discouraged. He applied those same mathematical principles to the markets, and also won. Mr. Thorp knows that good ideas have limited runs. As more investors pile into a winning trade, the returns start to diminish and the idea can no longer outperform the market. During a recent Bloomberg interview with Barry Ritholtz, Mr. Thorp discusses this phenomenon in the context of Berkshire Hathaway, whose […]

Ritholtz Says Stock-Picking is Still Alive if Not Kicking

Active fund management has been losing followers but isn’t going away entirely, writes Barry Ritholtz in a recent Bloomberg article. While stock-picking has seen a host of changes, he offers several insights as to “how we got here” including the following: Beating the market is tougher than most people thought, a notion that Ritholtz says has become “widely accepted among both professional investors and individuals.” We have a much greater understanding of investor psychology, and this “makes the case for low-cost index investing even more compelling.” Quantitative studies, writes Ritholtz, suggest that much of active investing performance is attributable to […]

Barry Ritholtz on Bulls and Bears

Understanding how old a bull market is may very likely affect your expectations of future returns as well as your investment allocations and risk appetite, writes Bloomberg columnist Barry Ritholtz. With regard to what many are calling an eight-year-old bull market, Ritholtz argues, “Rather than saying that the bull market is celebrating its eighth birthday, what we really are observing is the eighth anniversary of bear-market lows.” The difference is in the details, says the head of Ritholtz Wealth Management. He explains his view that a bull market begins when “indexes surpass earlier highs,” not simply when it rises from […]

Ritholtz on the Foibles of Forecasting

Barry Ritholtz, columnist and founder of Ritholtz Wealth Management, offers insights on the “problems and investing risks of forecasting” in a recent Bloomberg View. He explains that, because people dislike uncertainty so much, they tend to believe in predictions to create an “illusion of control and stability, where often there is none. Order is created out of chaos; it is a comforting illusion.” For investors, Ritholtz points out that “one of the biggest risks is the unfortunate tendency to stay wedded to predictions.” He uses the example of a bullish or bearish investor who, instead of admitting an error when […]