Adam M. Grossman

ONE SPRING DAY in 1995, McArthur Wheeler walked into two banks near his Pittsburgh home and robbed them at gunpoint.
His plan had one critical flaw: The disguise he chose didn’t hide his face at all. Instead of the usual stocking cap or hat and sunglasses, Wheeler made an unconventional choice. He applied a coating of lemon juice to his face. His reasoning: Lemon juice could be used to make invisible ink, so Wheeler figured it would have the same effect on his face,

WHEN WE ROLLED OVER into May, I was reminded of a saying I used to hear when I worked in the world of stock-picking: “Sell in May and go away.” The idea—based on questionable data—was that stocks lagged during the summer months.
This notion always seemed suspect to me. But even if it were true, I was never quite sure what to do with it. Should an investor sell everything on May 1 and then buy back on Labor Day?

A FEW WEEKS AGO, life changed for 24-year-old Manuel Franco of West Allis, Wisconsin. The winner of a recent Powerball lottery, Franco took home $326 million—and that’s after taxes. With a sum that large, it shouldn’t be hard for Franco to make his winnings last a lifetime.
And yet, more often than not, such windfalls deliver heartache rather than happiness. Consider Lara and Roger Griffiths, an English couple who, in 2005, won the equivalent of $3.2 million from their local lottery.

ON DEC. 7, 2005, a curious thing happened in a Harvard classroom. Prof. Michael D. Smith stood in front of a group of computer science students to introduce a guest speaker: entrepreneur and former Harvard student Mark Zuckerberg. What was curious was that the room was nearly empty. The class met in a huge lecture hall, but there were barely a dozen people in the room.
How could that be? Why was there so little interest in Zuckerberg’s presentation?

I RECENTLY CAME across an academic paper with an attention-grabbing title: “It has been very easy to beat the S&P 500.” Not just easy, but very easy. 
That got my attention because, in recent years, beating the S&P 500 has been anything but easy. In fact, it’s been maddeningly difficult. In eight of the past 10 years, domestic markets have outperformed international markets—by a wide margin. A dollar invested 10 years ago in the S&P 500 would be worth $4.37 today.

AS THE OLD SAYING goes, there are lies, damned lies and statistics. And then there’s investment performance, which may deserve a category all its own.
This topic came to mind recently when I saw a press release heralding the accomplishments of a retired nonprofit executive. Among the claims: that he had doubled the organization’s endowment. This struck me as impressive—until I considered it more critically. What did it mean that he had doubled the endowment?

I RECENTLY HAD the opportunity to attend a panel discussion that included the prominent investment manager Seth Klarman.
Not familiar with Klarman? The simplistic version of his biography has him as a hedge fund billionaire. While that’s true, it doesn’t do him justice. Klarman is more like a cult hero, at least in the investment world. Some call him the “Oracle of Boston.”
Google his name, and you’ll see him described as “the next Warren Buffett.” Search YouTube,

HAVE YOU EVER struggled with a financial decision? If you’re like most people, I suspect that the math wasn’t the hard part. Instead, more often than not, what makes financial decisions a challenge is the subjective element.
Financial decisions involve lots of variables—your future income, interest rates, housing prices, tax rates and more. We can make reasonable forecasts, but ultimately these decisions require us to make judgment calls without complete information, and that can be unnerving.

IN JANUARY 1946, a man named Stanislaw Ulam found himself confined to a hospital bed, having suffered an encephalitis attack. A brilliant scientist and a veteran of the Manhattan Project, Ulam wasn’t the type to sit idly while he recuperated. Instead, after playing innumerable games of solitaire to pass the time, Ulam began to examine the statistical aspects of the game.
Among the questions he asked: How can you accurately estimate the probability of winning a game?

IN MY ROLE AS a financial planner, I hear a lot of stories. By far the most appalling and upsetting relate to life insurance. All too often, insurance salespeople leave clients with policies that are simultaneously overpriced, inadequate and inappropriate.
Are you evaluating a policy? Here’s a quick summary of the most important considerations:
What type of coverage should I have? Life insurance comes in two primary flavors: term and permanent. Term insurance,

FEDERAL RESERVE Chair Jerome Powell appeared before Congress late last month and spoke in serious terms about the country’s debt situation. It’s worth understanding what Powell said—and how that might impact your investments.
Powell’s message: “The U.S. federal government is on an unsustainable fiscal path.” Specifically, “debt as a percentage of GDP is growing, and now growing sharply, and that is unsustainable by definition.”
Powell’s remarks mirrored those of the Congressional Budget Office (CBO).

LAST MONTH, The Wall Street Journal ran an article with a puzzling headline: “How China Pressured MSCI to Add Its Market to Major Benchmark.” Like a lot of market news, this arcane-sounding story came and went without much notice. But it’s worth pausing to understand what it was all about—and why it matters to you.
First, let’s decode the terminology in the article’s headline: A “benchmark” is another word for an index.

SUPPOSE YOU WALKED into a restaurant and they handed you a menu without prices. Would you conclude that: (a) everything is free; or (b) something funny is going on?
I doubt anyone would choose the first option. It defies logic. Yet this is how the 401(k) industry routinely operates—and large numbers of people are falling for it. According to a 2018 survey by TD Ameritrade, 37% of 401(k) participants mistakenly believe that their 401(k) retirement plan is a free employee benefit—that it carries no fees.

IN SUMMER 2000, the Art Institute of Chicago fell under the spell of a young hedge fund manager named Conrad Seghers. The allure? Seghers claimed that his funds, called Integral, offered “the highest Sharpe ratios in the industry.” The Sharpe ratio is supposed to measure an investment’s risk relative to its returns and is popular in the world of hedge funds. Convinced by this pitch, the Art Institute committed more than $40 million of its endowment to Seghers’s funds.

IMAGINE YOU’RE TRYING to guess the winner of a basketball or ice hockey game. Which of these methods do you think would work best?

Flip a coin.
Make an educated guess.
Gather data and conduct an informed analysis.

In a classic study, researchers Paul Slovic and Bernard Corrigan attempted to answer this question. Instead of basketball or ice hockey, they looked at horse racing, but the results are equally applicable.
In their study, Slovic and Corrigan asked expert handicappers to make predictions using varying amounts of data about the horses in a race.