Head Games

Adam M. Grossman

Adam is the founder of Mayport, a fixed-fee wealth management firm. He advocates an evidence-based approach to personal finance. Adam has written more than 200 articles for HumbleDollar.

Head Games

Adam M. Grossman  |  Feb 12, 2018

WARREN BUFFETT once quipped that, “You only find out who is swimming naked when the tide goes out.”
I’ve been thinking about this idea over the past two weeks, as markets around the world have given up all their year-to-date gains and then some. Since peaking on Jan. 26, the U.S. market, as measured by the S&P 500, has lost 8.8% of its value.
When the tide goes out like this, the emotional impact can be powerful—and the headlines just make it worse.

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A Better Plan

Adam M. Grossman  |  Feb 8, 2018

TED BENNA, the inventor of the 401(k) retirement plan, famously once stated that the system he created should be “blown up.” Why? It isn’t the fundamental structure, which he still believes in. What he doesn’t like is the complexity and costs that characterize today’s typical 401(k).
The original 401(k)s, he likes to point out, had just two fund options. Today, it’s more like 20. Because of that, it’s all too easy for bad investments and high fees to sneak in.

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Diversify Five Ways

Adam M. Grossman  |  Jan 30, 2018

A YOUNG GRADUATE student named Harry Markowitz wrote a paper in 1952 that sought to prove, mathematically, the old maxim “don’t put all your eggs in one basket.” Through his work, Markowitz taught investors how to diversify their investments effectively, something that was not well understood at the time.
For instance, he explained that the number of stocks you hold is far less important than the number of types of stocks you own.

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You Lose, They Gain

Adam M. Grossman  |  Jan 24, 2018

A FEW YEARS BACK, a fellow named Wylie Tollette faced uncomfortable questions as he sat before the public oversight committee of the California Public Employees Retirement System (CalPERS). Tollette, the pension fund’s Chief Operating Investment Officer, was responsible for updating the committee on the status of its massive $350 billion portfolio.
But when a committee member asked about the fees CalPERS was paying to a particular group of investment managers, Tollette did not have a ready answer.

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About That 22%

Adam M. Grossman  |  Jan 17, 2018

THE STOCK MARKET had a great 2017, gaining more than 20%. But was that kind of gain justified—or should it worry us, especially after the market had already tripled in recent years? I think it’s useful to understand the range of viewpoints, so we’re better prepared for 2018 and beyond. Here are the bull and bear cases:
Bull Case. As measured by the S&P 500 index, the U.S. market gained nearly 22% last year.

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More for Your Money

Adam M. Grossman  |  Jan 11, 2018

AT SEVEN O’CLOCK this morning, as my wife and I tried in vain to wake our children for school, we heard a similar response as we went from room to room: “My head hurts.” Nobody wanted to get up.
I have to say, I don’t blame them. It’s the middle of winter here in Boston. The sky is gray and the thermometer seems stuck below zero. It can be hard for anyone to feel motivated,

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First Things First

Adam M. Grossman  |  Dec 26, 2017

IN A CLASSIC EPISODE of the sitcom 30 Rock, Tina Fey’s character, Liz Lemon, muses about the size of her nest egg: “I have money saved. Two years. Maybe four, if I cancel cable.”
Not worried about the size of your cable bill? In all likelihood, you’re fretting about one aspect of your financial life—and probably more than one. You might be wrestling with housing costs, student loans, the cost of putting your own children through school,

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Grossman’s Eleven

Adam M. Grossman  |  Nov 28, 2017

I AM AMAZED OUR schools don’t require kids to learn three important life skills: the basics of nutrition, a thing or two about parenting, and how to handle money. I’m no expert on nutrition and my parenting is a work in progress. But I do have a background in personal finance: When folks ask me what to read to deepen their financial knowledge, I have a ready list of titles.
Recently, however, someone asked me for a more advanced list—a “201”

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Ten Principles

Adam M. Grossman  |  Nov 15, 2017

I RECENTLY LEARNED a new expression, TL;DR, which stands for “too long; didn’t read.” Twitter users and bloggers use it when they want to summarize an idea for readers who are short on time. It’s the modern equivalent of saying, “Here’s the executive summary.”
Coincidentally, this week, two people separately asked me what I see as the most important principles in personal finance. In other words, they wanted the TL;DR version, without too much commentary.

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Right but Wrong

Adam M. Grossman  |  Sep 22, 2017

I’M A BIG BELIEVER in transparency, so I’d like to tell you a little about my personal investments. As you might guess, the overwhelming majority of my money is allocated to simple, low-cost index funds—the same things I recommend in my writing and for my clients. That is true almost without exception. But today, I would like to describe one of those exceptions.
Many years ago, before I entered the investment industry, I purchased shares in a small mutual fund called the Mairs &

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Growing Up (V)

Adam M. Grossman  |  Sep 14, 2017

ONE OF MY FAVORITE activities as a child was to play with a tomahawk at my grandparents’ house. Yes, that was in the days before the Consumer Product Safety Commission. But in this case, it wouldn’t have made a difference: This particular tomahawk was no toy, but rather the real thing. It belonged to my grandfather. His name was Walking Buffalo, and he was a member of the Assiniboine, a Native American tribe who live on the Plains of Montana.

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By the Book

Adam M. Grossman  |  Aug 9, 2017

WHEN I LOOK at today’s world, I often think of Charles Dickens’s famous line, “It was the best of times, it was the worst of times.” Technology, including the web and smartphones, has made life so much more convenient.
Still, one thing I really miss from the “old days” is the experience of the traditional bookstore. Shopping online is great, but sometimes it’s easier to choose from a curated set of 10 books on a shelf than to sift through an unwieldy list of a thousand choices online.

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Go Fish

Adam M. Grossman  |  Jul 7, 2017

WHEN AN INVENTOR goes on record stating that his invention is “a monster” that he’d like to “blow up,” you know there’s a problem.
Such is the case with Ted Benna, who back in 1980 created the first 401(k) retirement plan. Since then, his invention has grown to become the dominant retirement vehicle for millions of Americans.
Why is Benna so negative on his creation? The problem, in a word: complexity. According to Benna,

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Site Seeing (Part III)

Adam M. Grossman  |  Jun 6, 2017

IN TODAY’S POLITICAL environment, discourse has become ever more fractious. The investment world, in my view, isn’t much better. Those who disagree generally talk past—rather than listen to—one another.
That is why, in my work as an investment advisor, I maintain a “team of rivals” approach, reading and listening to diverse opinions. Behavioral scientists often talk about confirmation bias—the tendency to seek out only information that confirms our preconceived notions. To counteract this bias,

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Footing the Bill

Adam M. Grossman  |  May 16, 2017

IN MY HOMETOWN of Boston, there’s an old joke about our dismal winter weather. “February,” they say, “is the longest month of the year.” I don’t disagree and so, each year at Presidents’ Day, my family tries to get away for a warm weather vacation.
On these trips, we often stay at the same hotel and, because of that, we have noticed certain patterns. Among them: Most years, there is the same large corporate gathering.

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