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.

I’LL NEVER FORGET MY first interaction with Wall Street. I was in my early 20s and just getting started in my career, when I was introduced to a stockbroker—let’s call him Eddie. He was a pleasant fellow with a good reputation and all the trappings of success, including a DeLorean in the driveway. He seemed like a safe choice.
My interactions with Eddie were straightforward. He would call from time to time with stock ideas.

IN THE FINANCIAL world, making money is the most popular pastime—but having a good argument is a close second.
What do folks argue about? HumbleDollar’s online money guide has always included a handful of sections labeled “great debates.” I decided to expand that collection to 12—and gather them together in their own chapter. Below you’ll find one of the new sections, plus links to the other 11.
Debate No. 8: Is Indexing Dangerous?

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?

I WORKED FOR MORE than 30 years in manufacturing, poring over data and paying attention to every detail that would impact production. As a project manager, I was responsible for making sure hardware was delivered on time, with no cost overruns or quality issues.
If we weren’t meeting deadlines or spending too much money, I was required to report these problems to upper management. They would ask me three questions: “What are you going to do about it?

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.

“YOU’RE FIRED” WAS made famous by Donald Trump as host of The Apprentice. Imagine my surprise when my broker delivered the same message to me two years ago.
In 2015, my job was transferred to Texas. I opted to become a long-distance commuter, while my family stayed in Maryland. Around that time, we moved homes, so our son could attend a better high school. In addition, I was helping to launch two huge long-term work projects.

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?

YOU COULD ARGUE that U.S. stocks are reasonably priced, with the S&P 500 companies trading at 22 times their reported earnings for the past 12 months. That’s not much above the 50-year average of 19.3—and hardly outrageous, given today’s modest bond yields.
But you could also argue that U.S. shares are horribly overpriced. The S&P 500 stocks today offer a dividend yield of just 1.9%, versus a 50-year average of 2.9%. Shares also seem pricey compared to both the value of corporate assets and average company profits for the past 10 years.

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,

WE GET MORE PAIN from losses than pleasure from gains—which might explain why I often think back on the five major market crashes that have occurred during my investing lifetime. There’s something about the massive hemorrhaging of money that has a way of focusing the mind and sticking in the memory.
Here are those five crashes, and what I learned from each:
Black Monday. I was age 24—with no money invested in stocks—when the S&P 500 plunged 20.5% on Oct.

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?

WHO DOESN’T LIKE free money? I know I do. If you’ve worked for a major U.S. corporation, you have probably also been offered free money. But there’s a potential downside—in the form of a large, undiversified investment bet.
What am I talking about? Let’s start with the matching employer contribution that’s offered in about half of 401(k) plans. You put in a portion of every paycheck and your company then matches all or half of your contribution.

INDEX FUND INVESTING seems to grow more popular by the day—for good reason: For very little in investment costs, you can get a diversified basket of stocks, a return that matches the targeted benchmark and a tiny annual tax bill.
But now that you have yourself such a fine financial vehicle, the responsibility to be a good investor lies in your hands. Or should I say, with your emotions? Even the best investments suffer downturns and spikes in volatility.