Adam M. Grossman

LOOK UP THE WORD “nit” in the dictionary and you’ll find a few definitions—none of them particularly positive. Perhaps, then, it’s no surprise that the tax commonly known as NIIT can be a bit of an annoyance.
NIIT is short for net investment income tax. It originated back in 2013 to help pay for the new health care law. The net investment income tax rate is relatively innocuous at 3.8%, and it’s already been on the books for 10 years,

ON FEB. 7, 1910, AN ODD event occurred in the English town of Weymouth. A group of five arrived for a tour of HMS Dreadnought, a battleship that was the pride of Britain’s navy. The five were welcomed with fanfare, their staff having communicated in advance that they were members of the Abyssinian royal family. Their appearance was impressive: flowing robes, great jewels and turbans. Through an interpreter, the Abyssinian emperor offered military honors to the ship’s crew.

MARK ZUCKERBERG and Elon Musk have been trading barbs in recent months, going as far as discussing a “cage match”—a literal fight.
This has followed a volatile few years for their respective companies. In October of last year, Musk took over Twitter and immediately started making changes. He fired 80% of its staff, causing an uptick in technical issues, and has made other spur-of-the-moment changes to the service. This has scared away advertisers, prompting a 50% drop in revenue.

HARRY MARKOWITZ, the Nobel Prize-winning economist who passed away recently, invented a new approach to investing. Known as modern portfolio theory, it offered investors, for the first time, a logical approach to building portfolios. How much should you hold in stocks vs. bonds? Markowitz could tell you precisely.
But Markowitz also knew math wasn’t the only driver of investment decisions. In a frequently cited interview, Markowitz recalled how he decided what to hold in his own retirement plan early in his career.

NEW YORK ATTORNEY Steven Schwartz recently found himself in hot water. Schwartz was representing a passenger injured on board an Avianca Airlines flight. In a filing with the court, Schwartz cited several precedents that appeared to support his case, including Martinez v. Delta Air Lines, Zicherman v. Korean Air Lines and Varghese v. China Southern Airlines. The only problem? These cases are all fictional—made up not by Schwartz, but by ChatGPT, an artificial intelligence (AI) “chatbot.”
The judge was not pleased,

THOSE WHO LIVE VERY long lives sometimes face an unfair irony: The accomplishments of even towering figures can lose their luster over time—not because they’re proven wrong, but because the ideas they developed become so widely accepted that we forget they were once innovations. The investment world lost one such towering figure last week: the economist Harry Markowitz, who was age 95.
Markowitz first came to prominence in the early 1950s, when his PhD thesis,

IN 2014, AN INVESTOR asked Charlie Munger—Warren Buffett’s second-in-command—why he wasn’t investing in Apple. Munger responded that, “No matter what their financial statements showed,” he’d never have a high degree of confidence in the company. “It’s just too hard.”
Buffett agreed. But things changed. Today, Buffett’s Berkshire Hathaway is Apple’s third-largest shareholder, with holdings valued at more than $150 billion.
What should we conclude from Buffett’s about-face? In recent weeks, I’ve referenced studies on market timing and trading.

WHAT DO WALL STREET analysts, magazine editors, economists and academics have in common? They’ve all found it virtually impossible to make accurate market forecasts. That’s why Vanguard Group founder Jack Bogle gave this advice to investors: When markets go haywire, “Don’t do something. Just stand there.”
Warren Buffett has given the same advice. In 2008, here’s how he explained it: “In the 20th century, the United States endured two world wars and other traumatic and expensive military conflicts;

A WHILE BACK, I WAS speaking with a mutual fund manager. In describing one of his fund’s stocks, he noted, “I owned it for a while, then I sold it, but then I bought it back.” It was a surprising comment since frequent trading is, in most cases, unproductive. Indeed, Warren Buffett has often said that his preferred holding period for an investment is “forever,” and many see that long-term mindset as crucial to his success.

TODAY MARKS MY 300th weekly contribution to HumbleDollar. Over time, one key theme has emerged: While personal finance can be complicated, it doesn’t have to be. How can you simplify your financial life? Below are 10 ideas.
1. Tracking donations. In the old days, it wasn’t too difficult to track charitable gifts. You would simply refer back to your checkbook. But today, most people use debit and credit cards,

PERHAPS YOU’VE SEEN charts like the one below, which comes from Dimensional Fund Advisors. The message: Investors who try to time the market in search of better returns often end up damaging their results. To many investors, this seems intuitive, because trading isn’t easy.
But to others, market timing appears to make a lot of sense. For instance, for years, Yale University professor Robert Shiller has been maintaining a measure of market valuation known as the cyclically adjusted price-earnings (CAPE) ratio.

IN THE NETHERLANDS in 1602, the Dutch East India Company conducted the world’s first initial public offering. Then, in 1610, the Netherlands saw the issuance of the first ever stock dividend. And in 1611, when the Amsterdam Exchange opened, the Netherlands became home to the world’s first stock market. Throughout the 1600s, the Netherlands continued to see further financial growth and innovation.
During that period, the Dutch economy was among the world’s largest. But its dominance faded over time,

LOOK AT THE STOCK market, and you’ll see that certain stocks often do better than others. Technology shares have been standout performers over the past 10 years, and health care stocks have done very well.
But research has also found that certain types of stocks have done better than others. Smaller-company stocks, for example, have outpaced those of larger firms. In the academic literature, characteristics like this, which are correlated with outperformance,

SUPPOSE YOU WERE presented with two prospective investments. On the surface, they look similar, except one has outperformed the other in 12 of the past 15 years. Which one would you choose?
This example isn’t hypothetical. The two investments in question are the S&P 500 and the EAFE Index. The S&P 500 is broadly representative of the U.S. stock market, while EAFE stands for Europe, Australasia and Far East. It’s the most commonly referenced index for developed international stock markets.

WHERE DOES THE STOCK market stand? After 2022’s decline, is it now fairly valued—or still overvalued?
When I think about questions like this, I’m reminded of an opinion piece written by Robert Shiller a few years back. By way of background, Shiller is a professor at Yale University and a Nobel Prize recipient. Along with a colleague, he created one of the more well-known and well-regarded measures of market valuation: the cyclically adjusted price-earnings ratio (CAPE).