Index

  • Page numbers followed by f refer to figures.
  • A
  • Abelson, Alan, on listening to market news, 67
  • Active trading (Mistake #2), 43–64
    • avoiding the mistake of, 64
    • in bear markets, 60–61
    • with endowments, 56–57
    • with hedge funds, 51–55
    • history of, 44–45
    • indexes as outperformers of, 61–64
    • with mutual funds, 45–51
    • newsletters and, 45
    • and performance, 59–60
    • and S&P 500, 62–64
    • and survivor bias, 45–47
    • and taxation, 59
    • with venture capital funds, 57–58
  • Advisor, choosing the wrong, see Working with the wrong advisor (Mistake #5)
  • AIM, 11
  • AIM Dent Demographic Trends Fund, 11
  • AllHedge Index, 54
  • Allocation:
    • being comfortable with your, 142–143
    • tactical, 20
  • “All-time highs,” 74–76
  • Alpert, Marc, 90
  • Alternative investments, 134–137
  • Amabile, Teresa, 103
  • Anchoring, 95–96
  • Annuities, 141
  • Anticipated earnings, 71–73
  • Apple, 57, 62
  • Arkes, Hal, 99
  • Asset allocation, tactical, 20
  • Asset-class rotation, 19
  • Asset managers, 82, 82f, 83
  • Attorneys, estate planning, 120
  • Australia, 37, 138, 140
  • B
  • Barber, Brad, 91
  • Bartels, MaryAnn, 24
  • Baruch, Bernard, on liars, 18
  • Basis, step-up in, 142
  • Bauer, Richard, 8
  • Bear markets, 26–33, 27f
    • active trading in, 60, 61, 61f
    • and bull markets, 68
    • corrections vs., 22
    • exposure of fraud during, 109, 110
    • and herding instinct, 87, 87f, 88
    • learning to accept, 33
    • outcome of, 27–28, 29f
    • overview of, 26–27
    • recovery from, 101
    • “turning” of, 30, 31f
    • unpredictability of, 28, 30
    • and volatility, 30, 31, 32f
    • and waiting for the market to “settle,” 31, 33, 33f
  • Beating the market, 146, 147f
  • Behavioral psychology of investing, 37–39
  • Belkin, Michael, 24
  • Bennett, Dawn, 25
  • Bernanke, Ben, 10
  • Bias:
    • anchoring, 95–96
    • confirmation, 93–95
    • loss aversion, 97–98
    • negativity, 103–105
    • recency, 100–103
    • survivor, 45–47
  • The Black Swan (Taleb), 65–66
  • Blodget, Henry, 26
  • Bloomberg, 69
  • Bogle, John:
    • on buying the haystack, 48
    • on data, 140
    • on fallacy of past performance, 100
    • on market timing, 14, 21
    • on passive indexing, 45
  • Bond market, 142
  • Bonds, 131–132, 138f, 139f, 143–144
  • Bora, Kukil, 23
  • Brafman, Ori, 96
  • Brafman, Rom, 96
  • Brigham Young University, 60
  • Britt, Sonya, 69
  • Brokers, 114–118
  • Bubbles, 74–75
  • Buffett, Warren:
    • on cash, 127
    • on companies he likes to buy, 119
    • on confirmation bias, 95
    • on exposure of Ponzi schemes, 110
    • on forecasts, 9
    • on gold, 129
    • on greed and fear, 85, 88
    • on holding periods, 59
    • on Long-Term Capital Management, 54–55
    • market vs. hedge funds bet of, 51–52, 55
    • on most important quality for investors, 85
    • on projecting into the future, 100
    • on risk, xxi
    • on short-term market forecasts, 8
    • on stock prices, 71
  • Bull markets, 33, 68, 87f
  • Bush, George W., 81
  • Business Week, 9, 101
  • Buyout equity funds, 134, 135
  • C
  • Calendar, committing to a, 39
  • Campbell's Soup experiment, 96
  • Capital gains, 142
  • Cash, 34, 127–129
  • Castle, Jonathan, 25
  • Causation, correlation vs., 77–79
  • Cekerevac, Sasha, 25
  • CERTIFIED FINANCIAL PLANNER™ (CFP®), 120, 123
  • Certified public accountants (CPAs), 120
  • Choosing the wrong advisor, see Working with the wrong advisor (Mistake #5)
  • Chunking, 98
  • CIA analysts, 92
  • Clark, Mitchell, 25
  • Clements, Jonathan, on investment gurus, 5
  • Client funds, custody of, 108–112, 112f
  • Clinton, Bill, 81
  • Closed funds, 48n1
  • CNBC, 6, 45, 68–70, 74, 145–146
  • CNN, 68, 69, 78
  • Commodities, 129–130, 142
  • Confirmation bias, 93–95
  • Conflicts of interest, 113–119
  • Consumer confidence, 31, 33
  • Cook, Kevin, 26
  • Coronavirus pandemic, 8
  • Corrections, 22–26
  • Correlation, causation vs., 77–79
  • Corzine, Jon, 93
  • Costs of trading, 43
  • Cowles, Alfred, 44–45
  • CPAs (certified public accountants), 120
  • Credit Suisse, 54
  • Custody of your money, 108–112
  • CXO Advisory Group, 79
  • D
  • Dahlquist, Julie, 8
  • Decision making, 90
  • Democratic Party, 80–82, 81f
  • Denrell, Jerker, 13–14
  • Dent, Harry, 10–11, 25
  • Dent ETF, 11
  • Dimon, Jamie, 93
  • Disciplined, staying, 39, 102, 103, 145–146, 153
  • Dividends, 34
  • Dohmen, Bert, 23
  • Dollar-cost averaging, lump-sum investing vs., 36–40, 38f, 39f
  • Dowd, Keith, 95
  • Dow Jones Industrial Average, 2, 3, 3f, 10, 11, 41, 74, 76, 79
  • Down markets, active management in, 60–61
  • “Downside protection,” 5
  • “Dr. Doom,” 12–13, 70
  • Drops, market, 83–84, 88
  • Drudge Report, 94
  • Dually registered advisors, 117–118
  • E
  • Earnings, anticipated, 71–73
  • Economic Predictions Research Project, 12, 15
  • Economists, and market timing, 9–14
  • Efficient market hypothesis, 7
  • Efficient markets, 6–7
  • El-Erian, Mohamed, 25
  • Elliott Wave Theorist, 17
  • Emerging market stocks, 133–134
  • Emotions, 85, 87–89, 103
  • “Endowment effect,” 97
  • Endowments, active trading with, 56–57
  • Enjoying your money, 151–152
  • Equity hedge funds, 52–53
  • Estate planning attorneys, 120
  • Ethical principles, 121–122
  • Exchange-traded funds (ETFs), 43
  • Existing holdings, not blowing out your, 140–142
  • ExxonMobil, 128, 141
  • F
  • Faber, March, 12n10
  • Fama, Eugene:
    • and efficient market hypothesis, 7
    • on security prices, 6
  • Fang, Christina, 13–14
  • Farrell, Maureen, 25
  • Farrell, Paul, 25
  • FDIC (Federal Deposit Insurance Corporation), 128
  • Fear:
    • managing, 85, 87–89
    • of regret, 37–39
  • Federal Deposit Insurance Corporation (FDIC), 128
  • Fees:
    • on active trading, 64
    • on hedge funds, 53, 54
    • on venture capital funds, 58
  • Ferri, Rick, on market timing, 78
  • Fidelity Magellan Fund, 54
  • Fiduciary standard, 114
  • Financial advisors. see also Working with the wrong advisor (Mistake #5)
    • and market timing, 5–6, 14–17
    • types of, 108
  • Financial crises (in general), 68
  • Financial crisis of 2008, 10, 15, 60, 93, 101
  • Financial information, misunderstanding, see Misunderstanding performance and financial information (Mistake #3)
  • Financial media, see Media
  • Financial news, actionability of, 79–80
  • “Financial News and Client Stress” (Grable and Britt), 69
  • FINRA, 114–116
  • Fisher, Irving, 10
  • Fisher, Ken, 14–15
  • Fisher Investments, 14
  • “The Folly of Stock Market Timing” (Jeffrey), 19
  • Forbes, 14, 101
  • Forbes, Malcolm, on newsletters, 17
  • Fortune, 101
  • FOX Business News, 6, 68, 69
  • FOX News, 94
  • Friedman, Milton, 10
  • G
  • Galbraith, John Kenneth, on predicting, 9
  • Gambler, being a, 100, 105–106
  • General Dynamics, 72–73
  • Global approach, taking a, 138, 140
  • Gold, 129–130, 130f
  • Goldman Sachs, 93
  • Google, 57, 62
  • Gottman, John, 104
  • Grable, John, 69
  • Graham, Benjamin:
    • on acting as an investor, 138
    • on market timing, 21
  • Graham, John, 17
  • Granville Market Letter, 17
  • Grasso, Steve, 74
  • The Great Depression Ahead (Dent), 10
  • Greed, 85, 87–89
  • Greenspan, Alan, 88–89
  • Gross, Bill, 25
  • Growth equity funds, 134, 135
  • H
  • Harding, Sy, 25
  • Hartung, Adam, on which political party is in power, 80
  • Harvard University, 56, 57
  • Harvey, Campbell, 17
  • Hedge Fund Research, 54
  • Hedge funds, 43, 51–55, 134
  • Herding instinct, 87, 88
  • Heuer, Richards, 92
  • High-net-worth investors, 107
  • Hoch, Steve, 96
  • Holding the market, 8
  • “House money,” 100
  • HS Dent Investment Management, 11
  • Hulbert, Mark, 17, 18, 23, 45
  • I
  • Index-based positions, using, 140
  • Indexes, as outperformers of active trading, 61–64
  • Inflation, 76
  • Information, and overconfidence, 92
  • Insurance companies, 44–45
  • International funds, 46
  • International Monetary Fund, 12
  • Investment advisors, 114–118
  • Investment Advisors Act of 1940, 114
  • Investment managers, and market timing, 14–17
  • Israelsen, Craig, 60
  • J
  • Jeffrey, Robert, 19
  • JP Morgan, 93
  • Judgment, 90
  • Junk bonds, 131
  • K
  • Kahneman, Daniel, 95, 96
  • Kansas State University, 69
  • Kauffman Foundation, 57–58
  • Kent, Robert, 96
  • Kimelman, John, 26
  • Kramer, Steven, 103
  • Krantz, Matt, 23
  • L
  • Large-cap mutual funds, 46
  • Lehrer, Jonah, on chunking, 98
  • Letting yourself get in the way (Mistake #4), 85–106
    • with anchoring, 95–96
    • avoiding the mistake of, 106
    • by being a gambler, 105–106
    • with confirmation bias, 93–95
    • with fear and greed, 85–89
    • with loss aversion, 97–98
    • with mental accounting, 98–100
    • with negativity bias, 103–105
    • with overconfidence, 89–93
    • with recency bias, 100–103
  • Licensing, advisor, 116
  • Livermore, Jesse, on Wall Street, 21
  • Long-Term Capital Management, 54–55
  • Loss aversion, 97–98
  • “Lost Decade,” 62, 63
  • Lump-sum investing, dollar-cost averaging vs., 36–40, 38f, 39f
  • Lynch, Peter:
    • on corrections, 22
    • on knowing what you own, 140
    • on making money in equities, 26
    • on stock shares, 71
    • on volatility of the market, 30
  • M
  • Madoff, Bernie, 55, 108–112
  • Madoff Investments, 110–111
  • Malkiel, Burton:
    • on beating the market, 146
    • on people making market predictions, 5
  • Markets, efficient, 6–7
  • Market drops, 83–84, 88
  • Market events, and fear of regret, 39
  • Market returns, xxi–xxii, xxiif, 43
  • Market timing (Mistake #1), 1–42
    • avoiding the mistake of, 41–42
    • and bear markets, 26–33
    • and consumer confidence, 31, 33
    • and “correction” predictions, 22–26
    • economists and, 9–17
    • and efficiency of markets, 6–7
    • evidence against, 8
    • the “Idiots” and, 5
    • and just taking the plunge, 40–41
    • the “Liars” and, 5–6
    • and lump-sum investing vs. dollar-cost averaging, 36–40
    • and media pronouncements, 8–9
    • miscalculating the risk of, 34
    • newsletters and, 17–18
    • and “perfect” investing, 34–36
    • reasons people engage in, 21–22
    • smart investors on, 20–21
    • strategies that don't sound like (but are), 19–20
    • and volatility of the market, 30–31
    • “your buddy” and, 18–19
  • Market volatility, 30–31
  • McDonald's, 72, 73, 128
  • McElroy, Todd, 95
  • Media:
    • fallacy of believing the, 67–71
    • on market timing, 8–9
  • Media prognosticators, 6
  • Melloy, John, 24
  • Mental accounting, 98–100
  • MF Global, 61, 93
  • Microcap stocks, 133
  • Mid-cap mutual funds, 46
  • Mid-cap stocks, 133
  • Middle-market lending funds, 136
  • Misunderstanding performance and financial information (Mistake #3), 65–84
    • and “all-time highs,” 74–76
    • and anticipated earnings, 71–73
    • avoiding the mistake of, 84
    • and correlation vs. causation, 77–79
    • and financial media, 67–71
    • and financial news, 79–80
    • and market drops, 83–84
    • and past performance, 65–67
    • and Republicans vs. Democrats, 80–82
    • and role of managers, 82–83
  • Money:
    • advisors and custody of your, 108–113
    • enjoying your, 151–152
  • Montier, James, 91
  • Morgan, J. P., on the market, 21
  • Morningstar, 15, 20, 48, 50
  • Morningstar Principia, 48
  • MSCI EAFE Index, 46
  • MSNBC, 94
  • Murtha, Frank, 89
  • Mutual funds, 43, 45–51
    • indexing vs., 45–46, 47f
    • and picking the “winners,” 48–51, 51f
    • and S&P 500 Index, 66, 67
    • and survivor bias, 46–48
  • N
  • NASDAQ, 110
  • Negativity bias, 103–105
  • Newsletters, 17–18, 45
  • New York Times, 94
  • The Next Great Bubble (Dent), 10
  • O
  • Odean, Terrance, 91
  • Oregon Research Institute, 92
  • Overconfidence, 89–93
  • P
  • Paralysis trap, 39
  • Passive management, 45–46
  • Past performance, 65–67
  • Paulson, John, 55
  • Pensions, 126
  • P/E ratio, 75
  • “Perfect” investing, 34–36, 35f
  • Performance:
  • Phillips, Don, 15
  • Plan:
    • having a clearly defined, 125–127
    • revisiting the, 144–145
  • Plous, Scott, 90, 92
  • Political parties, 80–82, 81f
  • Ponzi schemes, 109–112, 110f, 113f
  • Portfolio(s):
    • “beat the market,” 146, 147f
    • “get me what I need for the rest of my life,” 147, 148, 148f
    • “I have more money than I will every need,” 148, 149, 149f
    • “I need 7 percent to hit my retirement goal,” 146, 147f
    • and planning, 126–127
    • principles of constructing your, 150
    • rebalancing your, 143–144
  • Principles, 121–122
  • Private equity, 134–135
  • Private lending, 136
  • Private real estate funds, 136–137
  • Proprietary funds, 117–118
  • Prostitution, 99–100
  • Protégé, 51–52
  • Psychology of investing, 37–39
  • The Psychology of Judgment and Decision Making (Plous), 90
  • Purchasing power, 128
  • Purisma Total Return Fund (PURIX), 14–15
  • Q
  • Quinn, Jane Bryant, on market timing, 20
  • R
  • Raiffa, Howard, 90
  • A Random Walk Down Wallstreet (Malkiel), 5n4
  • Real estate bubble, 75
  • Real estate funds, private, 136–137
  • Real estate market, 142
  • Rebalancing, 143–144
  • Recency bias, 100–103, 102f
  • Reeves, Jeff, 26
  • Registered investment advisors (RIAs), 114, 117
  • Regret, 37–39
  • Regulation Best Interest (Reg BI), 115
  • REITs, 136
  • Republican Party, 80–82, 81f
  • Rescigno, Richard, 26
  • Retirement goals, 146, 147f
  • RIAs (registered investment advisors), 114, 117
  • Risk:
    • miscalculating, of market timing, 34
    • stocks and, 133
  • Rooney, Ben, 23
  • Rotation, asset, 19–20
  • Roubini, Nouriel, 12, 23, 70
  • Roubini Global Economics, 12
  • Royzman, Edward, 103
  • Rozin, Paul, 103
  • Rules for success, 125–150
    • allocation, being comfortable with your, 142–143
    • cash and gold, avoiding, 127–130
    • clearly defined plan, having a, 125–127
    • existing holdings, not blowing out your, 140–142
    • global approach, taking a, 138, 140
    • index-based positions, using, 140
    • rebalancing, 143–144
    • revisiting the plan, 144–145
    • staying disciplined, 145–146
    • stocks and bonds, focusing on, 131–139
  • S
  • Saut, Jeff, 25
  • Schiff, Peter, 15–16
  • Schwab Center for Financial Research, 35
  • Sector rotation, 20
  • Securities and Exchange Commission (SEC), 109, 114–116, 119
  • Securities Exchange Act of 1934, 114
  • Seeking Alpha, 16
  • Seides, Ted, 51–52, 55
  • “Sell in May and Go Away” theory, 78–79
  • “Settle,” waiting for the market to, 31, 33, 33f
  • Sharpe, William, 7
  • Shell, Adam, 25
  • Shepherd, Dean, 91
  • Siegel, Jeremy, on fear, 85
  • Slovic, Paul, 92
  • Small-cap index funds, 58
  • Small-cap mutual funds, 46
  • Small-cap stocks, 133–134
  • Smart investors, on market timing, 20–21
  • S&P 500 Index, 3f
    • and active trading, 62–64
    • changes in, by year, xxiif
    • endowment performance vs., 57
    • hedge fund performance vs., 54, 55
    • intra-year declines vs. calendar year returns for, 32f
    • large-cap fund managers' performance vs., 46
    • market share of, 3
    • mutual fund losses in 2000 vs., 50
    • mutual fund managers and, 66, 67
    • newsletter predictions vs., 17
    • and portfolio taxation considerations, 141
    • PURIX fund return vs., 15
    • and the “right time” to enter the market, 40–41
    • during 2020 market crisis, 60
    • and value of market, 76
  • S&P Dow Jones Indices, 46, 47. See also Dow Jones Industrial Average
  • “Sports Illustrated Swimsuit Edition Indicator,” 77
  • “Status quo effect,” 97
  • Step-up in basis, 142
  • Stiglitz, Joseph, 14
  • Stocks, focusing on, 132–134, 138f, 139f
  • Stock market crash (1929), 10
  • Stress:
    • from investing, 89
    • from watching financial news, 69–71
  • Stuart Frankel, 74
  • Style rotation, 20
  • Suitability standard, 115
  • Sullivan, Todd, 16
  • “Super Bowl Indicator,” 77
  • Survey of Economic Forecasts (Wall Street Journal), 13
  • Survive & Prosper website, 11
  • Survivor bias, 45–47
  • Swenson, David, on mutual fund returns, 46, 47
  • T
  • Tactical asset allocation, 20
  • Taking the plunge, 40–41, 153–154
  • Taleb, Nassim, 65–66
  • Taxation, 59, 141
  • Tax-deferred accounts, 140–141
  • Tech bubble, 75, 101
  • Templeton, John:
    • on bull markets, 31
    • on most expensive words in English, 27
  • Thaler, Richard, 98–99
  • Time magazine, 9
  • Timing the market, see Market timing (Mistake #1)
  • Trading costs, 43
  • Treasury bonds, 128
  • Tversky, Amos, 95, 96
  • Twain, Mark:
    • on history, 44
    • on when not to invest, 77
  • U
  • United Kingdom, 37
  • United States, 37, 128–129, 140
  • University of Georgia, 69
  • University of Michigan, 33
  • W
  • Wall Street Economics Institute, 12, 15
  • Wall Street Journal, 13, 94
  • Walmart, 73, 128, 141
  • Wansink, Brian, 96
  • Weil, Dan, 26
  • Wein, Byron, 25
  • Working with the wrong advisor (Mistake #5), 107–123
    • avoiding the mistake of, 122–123
    • and competence issues, 119–121
    • and conflicts of interest, 113–119
    • and custody of your money, 108–113
    • and principles, 121–122
    • and types of advisors, 108
  • Y
  • Yale University, 56
  • Yates, Jonathan, 23
  • Yousuf, Hibah, 24
  • Z
  • Zacharakis, Andrew, 91
  • Zelizer, Viviana, 99
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