Study Shows Retirees Become More Pessimistic About the Market as They Age

A new study shows that as people age, they become more pessimistic about the stock market and the economy as a whole, and actually spend less “just as many can start enjoying their life’s savings,” according to a recent Wall Street Journal article. Study author Matt Fellowes, former chief executive of Morningstar subsidiary HelloWallet, says that as we age “our ability to reliably anticipate the future weakens,” and even people who have saved carefully end up not enjoying retirement as they should. Fellowes argues that this isn’t necessarily a revelation. “We have known for a long time that people become […]

Sentiment Measures Are Not Reliable Investment Cues

The topic of market sentiment and how it manifests in stock price shifts and investor behavior is addressed in this week’s Enterprising Investor. In today’s post-election market, the article points out that sentiment measures have increased. “A recent Investors Intelligence Sentiment Report registered 65% bulls—not an extreme reading, but above the roughly 45% average.” The author warns, however, that such measures alone are not reliable. “Investors should not base their decisions on psychology alone,” it says, “but they should always be assembling and updating their worldview. Paying attention to excessive sentiment is a good way to avoid overpaying.” Long-term investors, […]

Steve Cohen’s Head Performance Coach Talks Portfolio Manager Mindset

As the PGA tour winds down and the Olympic Games approach, it seems only fitting to share some perspective on the investment world from a famous sports psychologist. Dr. Gio Valiente has worked with many of the top PGA Tour players to help them improve their mental game. A Yahoo Finance article from earlier this month describes what Valiente (who recently joined Steve Cohen’s $11 billion Point72 Asset Management as head performance coach) views as the similarities between coaching athletes and portfolio managers. “Once you think you have all the answers,” Valiente says, “markets will punish you.” He says that […]

Think Twice before Listening to the Pessimists

During these post-Brexit days when hanging crepe seems to be the favorite pastime, one has to wonder why so many folks default to gloom-and-doom scenarios. Morgan Housel of The Motley Fool explains it this way: “Pessimism isn’t just more common than optimism, it also sounds smarter.” When it comes to investing, Housel differentiates between perceptions of those that are bullish and those that are bearish. He argues that a bull sounds like a “reckless cheerleader” while a bearish investor sounds like a “sharp mind who has dug past the headlines, despite the record of the S&P rising 18,000-fold over the […]

When the Going Gets Tough, the Rich Take a Hike

A new study has found that folks in the top 0.1% tax bracket run for the exits fastest on the days when market volatility spikes (according to government data collected in 2008 and 2009). According to Bloomberg News, the idea behind the study was that different people react with varying degrees of urgency amidst signs of trouble, which can in turn feed market meltdowns. So why do the rich bail more quickly? According to one author of the report, there are a few possibilities: Wealthy people have more at stake per person and are more sensitive to shocks; The rich believe they are better market timers; Investors who earn less are reluctant to sell […]