What is Monte Carlo Analysis?(and why it is important to you)

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If there’s one question on every investor’s mind, it goes something like this: “How am I doing so far?” This universal query is especially relevant when you’re making plans to retire or pursuing other substantial financial goals.

Since we cannot accurately predict the future, Monte Carlo simulation allows for risk analysis and decision making using a mathematical computer model applying quantitative analysis theory. Monte Carlo Analysis allows you to see alternate possible outcomes and measure the impact ...

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What Is the Yield Curve?

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… the Treasury yield curve continues to flatten—historically, a harbinger of a slower economy. The spread, or difference, in the yields of the Treasury’s two- and 10-year notes, to under 20 basis points, is the smallest since July 2007…  Barrons Up & Down Wall Street Column 8/27/18

 The yield curve is flattening (or growing steeper)! … Yield curve spreads are widening (or narrowing)! … The yield curve has inverted (or normalized)!

Headline-grabbing yield curve commentary somehow sounds important, ...

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Diversification: Alternatives – Risk Reduction or Added Complexity and Costs

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If there’s one thing you can count on, both in life and investing, its’ uncertainty. That’s why we save and invest to begin with. We save and invest today, hoping our money will grow. We act on our aspirations for a bright financial future, but we never know for sure.

It stands to reason, then, if there were a credible, evidence-based way to ...

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Cryptocurrency: Bubble or New Economy?

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Have you caught cryptocurrency fever, or are you at least wondering what it’s all about? Odds are, you hadn’t even heard the term until recently. Now, it seems as if everybody and their cousin wants in.

Psychologists have assigned a term to the angst you might be feeling in the heat of the moment. It’s called “FoMO“ or Fear of Missing Out. Education is the best first step toward making informed financial choices that are right for ...

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Behavioral Biases – Part III

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We’re coming in for a landing on our alphabetic run-down of behavioral biases. We’ll wrap our series, the ABCs of Behavioral Biases, by repeating our initial premise: Your own behavioral biases are often the greatest threat to your financial well-being. Exhibit 1, attached, is a helpful summary of the biases we’ve covered throughout this series. Today, we’ll present the final line-up: sunk cost fallacy and tracking error regret.

Sunk Cost Fallacy

What is it? Sunk cost fallacy makes it ...

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Behavioral Biases (Part II)

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Let’s continue our alphabetic tour of common behavioral biases that distract otherwise rational investors from making best choices about their wealth. There are so many investment-impacting behavioral biases, we could probably identify at least one for nearly every letter in the alphabet. As Warren Buffett has famously said, “Investors should remember that excitement and expenses are their enemies. And if they insist on trying to time their participation in equities, they should try to be fearful ...

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An Index Overview Part II: Index Points and Mechanics

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As we covered in our last piece, indices have their place. They can roughly gauge the mood of a market and its participants. If you have an investment strategy designed to capture that market, you can see how your strategy is doing in comparison … again, roughly. You can also invest in an index fund which tracks a market index.

This may help explain why everyone seems to be forever ...

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Stock Market Index – Part I: Indices, Defined

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The Dow Jones Industrial Average topped 20,000 for the first time on January 25, 2017, but you probably already knew that as every media outlet went crazy reporting the “news”. But when a popular index like the Dow is on a tear, up or down, what does it really mean to you and your investments?

That’s the real question we need to ask ourselves.

In this multi-part series, we’re going to cover ...

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