Robin Powell

MUCH OF THE MEDIA commentary about investing positions the individual as a heroic figure. We are, it seems, all supposed to deploy our expertise in a battle to beat the market, with bragging rights going to the winners.
Problem is, this framing is based on three myths.
Myth No. 1: Your job is to outwit the financial markets.
Underlying this is the notion that the key to investment success is to have rare insights and expertise not shared by anyone else,

YOU’RE SITTING IN your favorite restaurant, feeling famished. The waiter arrives and reads a long list of mouth-watering specials. Yet the moment he walks away, all you can recall is the last item on the list.
Welcome to the recency effect.
In psychology, the recency effect refers to the human tendency, when asked to remember a long list of things, to have sharper recall of the final items. No doubt you’ve experienced this at a party.

IT SEEMS EVERYONE has an opinion about the markets—and they are, of course, entitled to those opinions. But here’s the irony: Some of the most successful investors have also been among the least dogmatic in expressing their views.
Perhaps it’s the humility gained from repeatedly trying and failing to second-guess the financial markets. These veteran observers of markets are a stark contrast to the swashbuckling managers who flaunt their confidence about the likely direction of stocks and bonds—a sales strategy they use to encourage people to buy products they don’t need.

IF YOU ASKED everyday Americans to define a financial plan, chances are they’ll talk about investment strategy. And for many people who call themselves financial advisors, that’s what a financial plan amounts to.
But a real plan is so much more than that.
To be sure, investment strategy will form part of a financial plan. But a strategy that isn’t moored to each individual’s goals, risk tolerance, financial situation, family circumstances and values isn’t really a strategy at all.

WHAT ARE PEOPLE paying for when they seek out a financial planner? Where’s the real value? The answers may surprise you.
Financial planners typically tout their advice on asset allocation, retirement planning, cash flow analysis, insurance, wealth protection, estate planning and so on. But is that really the benefit they bring to consumers?
Consider an entirely different business. When you take your car to get serviced, what are you paying for? Brake repair, transmission diagnosis,

WHEN FINANCIAL planners are asked at parties what they do for a living, many hesitate to be specific. Why? Because the inevitable follow-up questions relate to where they think the stock market, the dollar, interest rates or the economy are headed.
It’s a myth that dies hard—the idea that a financial planner is a market prophet with special powers for foreseeing the next big boom or bust. To be sure, some advisors position themselves as smart forecasters or market timers.

I LOVE BOOKS BY Bill Bryson. If you haven’t read his latest, The Body: A Guide for Occupants, you should.
It’s an encyclopedia of the wonders of the human body. The overriding message, jumping out of every page, is how truly miraculous our bodies are.
Did you know, for example, that you are made of seven billion billion billion atoms? That if you laid all the DNA in your body end to end it would stretch 10 billion miles,

MY LAST JOB IN mainstream journalism was in 24-hour TV news. When a big story broke, we dropped everything. The viewers, we were told, were only interested in one story. Today that story is COVID-19, better known as the coronavirus. Next week—perhaps even tomorrow—it could be something completely different.
Human beings are finely attuned to what we see as immediate threats. It’s how we evolved. But it isn’t always helpful. The reality: The chances of any of us catching the coronavirus,

BEATING THE STOCK market over the long term is no mean feat. Only a tiny proportion of investors—professional or otherwise—manage to do it. So why do so many people think they can?
Meir Statman, a finance professor at Santa Clara University, cites eight key reasons. In a new monograph titled Behavioral Finance: The Second Generation, he slots these reasons into two broad categories—five cognitive and emotional errors, followed by three expressive and emotional benefits:
1.

IS SUSTAINABLE investing a fad? Everyone seems to be talking about it—not least product providers eager to persuade us that their sustainable funds are so much better, more ethical or more likely to outperform than everyone else’s.
Leaving aside the moral reasons for investing in funds that aim to deliver environmental and societal benefits, is sustainable investing a good idea financially? Do sustainable funds, otherwise known as ESG (environmental,

IT’S THE GREAT investor fantasy: Quit the stock market at the top and buy back in at the bottom. While the lure of market timing sells millions of books and is standard fodder for financial television, the reality rarely lives up to the promise.
History is littered with the failed dreams of market timers. Less than five years after the nadir of the financial crisis, some pundits were saying U.S. stocks were overvalued. Another five years on and the market had gained more than 60%.

“JOURNALISM IS printing what someone else does not want printed. Everything else is public relations.” It’s a quote that should be framed on the wall of every newsroom.
Of course, every journalist knows this. We call PR—public relations—the dark side. But most of us journalists stray into it far more often than we like to admit.
As a reporter, I cut my teeth at a group of regional newspapers in a prosperous part of England in 1989.

IT’S INTUITIVE THAT, the cheaper a stock is when you buy it, the greater the expected risk-adjusted return. Indeed, academic research has shown this to be true. Eugene Fama and Kenneth French demonstrated in a 1992 academic paper how, over the long term, so-called value stocks have delivered significantly higher returns than growth stocks.
Fama and French defined value stocks as those companies with a book value—the accounting difference between corporate assets and liabilities—that was high relative to their stock market value.

WISH YOU COULD invest in one of those exclusive investment funds that buy private companies? Maybe it’s lucky you can’t.
It’s easy to see why institutional investors and wealthy individuals are so keen on private equity. It’s a useful diversifier. It also offers the potential for higher returns than publicly traded companies at a time when, for a variety of reasons, pension plans, university endowments and other bigtime investors are under pressure to improve investment performance.