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Coping With Crazy

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.

Coping With Crazy

Adam M. Grossman  |  Mar 7, 2021

FOR MORE THAN a year, veteran investment manager Jeremy Grantham has been arguing that the U.S. stock market is in a bubble. And not just an ordinary bubble, but “an epic bubble… one of the great bubbles of financial history, right along with the South Sea bubble, 1929, and 2000.”
And yet, despite Grantham’s concerns, the market has only continued to march higher. In a recent interview, Grantham reiterated his concerns in even stronger terms.

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Beware Groupthink

Adam M. Grossman  |  Feb 28, 2021

ECONOMIST JOHN Maynard Keynes once observed that, “It is better for reputation to fail conventionally than to succeed unconventionally.” This is probably true in many realms. It’s certainly true in the investment world.
As the last 12 months have demonstrated, extreme and unexpected events can and do happen. But analysts whose job it is to make economic forecasts rarely go too far out on a limb. Sure, there are some forecasters who will take a chance with a view that’s far outside the consensus.

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Not That Simple

Adam M. Grossman  |  Feb 21, 2021

CHIMAMANDA ADICHIE coined the term “single story” in 2009. A novelist and a native of Nigeria, Adichie first came to the U.S. to attend college. Almost immediately, she was struck by the one-dimensional lens through which many saw her. It started with her roommate.
Knowing that Adichie had just arrived in this country, her roommate—an American—asked how she was able to speak English so well. Adichie had to explain that English is Nigeria’s official language.

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My Confession

Adam M. Grossman  |  Feb 13, 2021

BACK IN 2017, I wrote about an oddity in my portfolio—an actively managed mutual fund that I bought without much thought to how it fit with my overall financial goals. Today, I have a confession. That fund isn’t the only oddity I own. In the interest of transparency—and because I hope readers will find it instructive—here are five more oddities, plus the thinking behind each:

While I firmly believe that low-cost index funds are the best way to build wealth and I believe that stock-picking is a fool’s errand,

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Just Resting

Adam M. Grossman  |  Feb 7, 2021

IN THE FAMILY TREE of investors that began with Benjamin Graham sits a quiet, 100-year-old firm called Tweedy, Browne. This week, it published a chart that offered a new angle on a key debate in the world of personal finance: Is value investing dead—or just resting?
Before I get into the details of the Tweedy chart, I’ll back up and first recap the concept of value investing and why there’s a debate about it.

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Street Brawl

Adam M. Grossman  |  Jan 31, 2021

EVERY SO OFTEN, an arcane topic jumps from obscurity into the headlines. Such was the case last week when everyone was suddenly talking about the “short squeeze” on Wall Street. Below I’ll explain what happened and offer four thoughts on how to respond.
What does it mean to short a stock? In simple terms, it means you’re betting a stock will decline in price.
How does one accomplish this? First,

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For Their Sake

Adam M. Grossman  |  Jan 24, 2021

A FEW YEARS BACK, I found myself in the emergency room, thinking I had a serious condition. As I sat there, I worried about my family, including my wife and young children. If I didn’t come home, would my wife have a clear picture of our finances?
Fortunately, the health scare turned out to be a false alarm, but it was a wakeup call. Sure, I had an estate plan, but I realized that a binder full of legalese wasn’t enough.

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Riot? What Riot?

Adam M. Grossman  |  Jan 17, 2021

THE CAPITOL WAS invaded by an angry mob 11 days ago. A week later, the House of Representatives voted to impeach the president. But if you’d been looking only at the stock market, you would have no idea.
Not only is the market higher today than it was the day before this all started, but also the VIX—the market’s “fear gauge”—is lower. From the perspective of the stock market, it’s been an ordinary few weeks.

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Moving the Target

Adam M. Grossman  |  Jan 10, 2021

IT’S GETTING TO THAT time when New Year’s resolutions start falling by the wayside. Most people don’t worry too much about this. But it would be nice if there were a way to give resolutions more of a shelf life.
Todd Herman, a performance coach who has trained dozens of Olympic athletes, offers one possible solution. He calls it the “90-day year.” The premise is that a year is just too long a timeframe.

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Those Messy Humans

Adam M. Grossman  |  Jan 3, 2021

WHEN I THINK BACK to Finance 101, what I recall—more than anything—is a whole lot of formulas. First came the calculation for present value, then formulas for valuing bonds, stocks, options, futures, forwards and all sorts of other financial instruments.
This was interesting. But with each passing year, I’ve come to realize that this introduction to finance was also incomplete. It was incomplete because—to state the obvious—the real world doesn’t always adhere to formulas.

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What We’ve Learned

Adam M. Grossman  |  Dec 27, 2020

WHEN I THINK BACK on 2020—and I know we aren’t quite done with it yet—I’m reminded of the movie Alexander and the Terrible, Horrible, No Good, Very Bad Day. But to paraphrase Nietzsche, chaos isn’t all bad—if something positive ultimately emerges from it.
Below are five financial lessons that, in my mind, are worth carrying beyond this year:
1. Stock prices respond to news—but never in a predictable way. Leading up to the election,

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Unhelpful Advice

Adam M. Grossman  |  Dec 20, 2020

YOU’RE DRIVING DOWN the highway when, all of a sudden, a maniac goes speeding by, weaving in and out of lanes. Most of us have experienced this—and most of us have the same reaction. “That guy is crazy,” we think to ourselves. “If he doesn’t slow down, someone’s going to get hurt.”
But suppose that an observer instead responded, “That fellow’s speed is perfectly appropriate. Nothing at all wrong with it.” Now, you might think it’s the observer who’s the crazy one.

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Help Today’s Self

Adam M. Grossman  |  Dec 13, 2020

SO MUCH OF PERSONAL finance is focused on our future self—and that’s a challenge. Think about the standard prescriptions: Open an IRA. Maximize your 401(k). Save for college. Save for retirement. Build an estate plan.
These are all about the future—often the very distant future. An enormous amount of time and energy is spent planning for “someday.” But it’s equally important to focus on things that can be done to benefit you today.

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Split the Difference

Adam M. Grossman  |  Dec 6, 2020

IT’S THAT TIME of year again, when Wall Street strategists begin publishing their market forecasts for next year. If you’re wondering whether to put any stock in those glossy publications, here’s my recommendation: Think back a year to the forecasts issued at the end of 2019. Did any of them predict that a virus would come out of left field, throwing the economy into recession, triggering a bear market and killing more than a million people worldwide?

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Game Theory

Adam M. Grossman  |  Nov 29, 2020

WHEN I WAS A KID, I never liked the game Monopoly. I found it slow and uninteresting. But now, as a parent, I see its value. I’ve tried a lot of things to teach my children about money, but nothing comes close to Monopoly in its ability to convey important personal finance lessons.
Sure, it helps kids practice basics like addition and subtraction—but there’s a lot more to it. If you’ll be spending time with children over the holidays,

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