Here's a controversial thought: Men and women are different.....in terms of how they invest.
A variety of studies have been done on gender-based financial behavior. The 2007 Sharebuilder Women and Investing Survey finds that women tend to be more involved in the family balance sheet. Just over 60% of women manage the household checkbook; 58% pay the bills; 44% (versus only 23% of men) oversee the budget.
Yet only 15% of married women take primary care of the family investments. This in spite of the finding that, when it comes to choosing investments, women tend to be more diligent, spending almost twice as much time researching mutual funds before investing. This could be due to greater caution on the part of women, or, depending how you look at it, greater confidence on the part of men. Whatever the cause, it pays off for the ladies. Finance professors Brad Barber and Terrance Odean find that—though women hold less risky portfolios than men, pursuing (and expecting) lower returns—after adjusting for differences in risk, women achieve better returns.
Before women take a victory lap, note that there is a larger, gender-neutral point: Overconfident investors trade too much. Barber and Odean take pains to assure us that gender is but a convenient statistical tool for the real factor at work – overconfidence. Psychology researchers have long held that men are more prone to overconfidence, so we'd expect them to trade more aggressively. We'd also expect this trading to increase costs, which in turn will reduce performance. To test this, the authors set out to determine if the population that is naturally overconfident earns lower average returns than the population that isn't. (See? It's not about men and women at all!)
The professors analyze a huge database of brokerage accounts from the 1990s. They find that married men trade 45% more than married women and earn annual risk-adjusted net returns that are 1.4% lower. Moreover, the differences widen when the sample isn't married people: Single men trade 67% more than single women and earn annual risk-adjusted net returns that are a full 2.3% lower. Worse still, the men have average turnover (a measure of trading frequency) of 77% per year, while the women have average turnover around 53% per year. (Both of those percentages are high – maybe both groups need advisors instead of commission-paid brokers!)
If you believe the stereotypes, these results shouldn't surprise you. Men are supposedly brought up to embrace competition and risk. This translates into winning short-term sprints, not waiting out marathons in broadly diversified strategies. Sure, research is great, but guys don't like to ask for directions. Women, on the other hand, are more likely to avoid knife-fights, or take a flyer on some dicey investment. The research shows they're also more likely to seek out data and expert help, and to take their time – perhaps too much time – before committing assets.
In the final analysis, it’s best for both genders to avoid the pitfalls of emotional investing, the symptoms of which are frequent trading and/or improper asset allocation. Successful investing requires a mixture of confidence and caution, along with a healthy dose of objectivity, patience, and knowledge. These traits will make better investors of both men and women.....and there’s nothing controversial about that.
Tuesday, August 24, 2010
Tuesday, August 17, 2010
More Observations From The Iowa State Fair
A year ago I blogged about seeing way too many overweight people at the Iowa State Fair. I also went on to suggest a tax that might help stem the tide of obesity in Iowa/America.
http://streffblog.blogspot.com/2009/08/tax-on-fat-people.html
During my annual visit to the fair this year, I made a few more observations:
*Tattoos are everywhere, and I'm not talking about the little guy from Fantasy Island. I'd estimate 1 out of every 10 people at the fair had a tattoo, but increase that to 1 out of every 5 people under the age of 40, and 1 out of every 3 between the ages of 20-35. And that only counts the visible tattoos; it might be 50% or more under age 35. It's just part of being young now, similar to ear piercing in my generation.
*If you want to surpress your appetite, closely watch what's happening in most of the temporary food stands. They're often dirty and smelly, meaning both the stands and some of the people working in them. And the food is, um, greasy. One image I still can't get out of my head was the guy who turned over the french fries basket to dump the latest load in a pan - only to have it fall out of the basket still molded in the rectangular shape of the basket! Perhaps this is actually a new fair food item: French Fry Loaf.
*Free entertainment at the fair still kicks butt. There's a variety of live music, demonstrations, and contests to watch. This year I caught a glimpse of the Mr. Legs Contest. As I tweeted at the time, I chose not to participate because I didn't want to demoralize the competition, and because I don't think it's right for pros like me to compete with amatuers. Regardless, the price of admission buys you a lot of value at the Iowa State Fair.
*Generally speaking, people are still fat.
http://streffblog.blogspot.com/2009/08/tax-on-fat-people.html
During my annual visit to the fair this year, I made a few more observations:
*Tattoos are everywhere, and I'm not talking about the little guy from Fantasy Island. I'd estimate 1 out of every 10 people at the fair had a tattoo, but increase that to 1 out of every 5 people under the age of 40, and 1 out of every 3 between the ages of 20-35. And that only counts the visible tattoos; it might be 50% or more under age 35. It's just part of being young now, similar to ear piercing in my generation.
*If you want to surpress your appetite, closely watch what's happening in most of the temporary food stands. They're often dirty and smelly, meaning both the stands and some of the people working in them. And the food is, um, greasy. One image I still can't get out of my head was the guy who turned over the french fries basket to dump the latest load in a pan - only to have it fall out of the basket still molded in the rectangular shape of the basket! Perhaps this is actually a new fair food item: French Fry Loaf.
*Free entertainment at the fair still kicks butt. There's a variety of live music, demonstrations, and contests to watch. This year I caught a glimpse of the Mr. Legs Contest. As I tweeted at the time, I chose not to participate because I didn't want to demoralize the competition, and because I don't think it's right for pros like me to compete with amatuers. Regardless, the price of admission buys you a lot of value at the Iowa State Fair.
*Generally speaking, people are still fat.
Thursday, August 5, 2010
A Solution In Search Of A Problem
When taxpayer money is used for so-called community betterment, I tend to want to put my hand over my wallet. Most of these projects are don't solve anything, and actually make matters worse by taking funds from more worthwhile things (like my bank account).
In the span of a couple of hours today I came across two seemingly unrelated items that, upon further review, are completely related. They are both items of community betterment, and they are both publicized as something we citizens should be proud of, but they are also both a waste of taxpayer time and money.
First the more obvious one - middle-of-the-road bicycle lanes. Even though I'm a biker, this has got to be one of the dumbest ideas since new Coke (maybe the best example ever of fixing something that wasn't broken). There is nothing wrong with staying on the right side of the street and sharing the road, or even better, bike lanes along the curb side of the street. But down the middle? One of my favorite bike routes recently added these lanes, as have other parts of Des Moines, and believe me, it does not make biking safer, it makes it more dangerous. Aside from the lack of need, don't forget, taxpayers paid for this lane remarking too! WTF!
Now the less obvious one - new school construction and/or remodeling. I'm all for good physical school facilities, but reading about the summer projects being completed in our suburban school district should make taxpayers cringe. It isn't just the multi-million dollars being spent on over-the-top common rooms and equipment, it's how the district brags about it. "Hey, look at all of this taxpayer money of yours we're spending! It must have been growing on trees because there it was, so we spent it!" I've yet to see any study that directly correlates school building spending with better student-citizens. If the district cares about that, wouldn't they (also wrongly) hire more teachers, or at least keep the ones they have? (Shhhhhh.....don't say anything about school districts here are laying off teachers because the state is running out of money thank you very much worst governor ever Chester Culver.)
When a lot of time and money gets wasted on things that don't do any good, that's a solution in search of a problem. Funny how it usually happens in the governmental, not-for-profit world.
In the span of a couple of hours today I came across two seemingly unrelated items that, upon further review, are completely related. They are both items of community betterment, and they are both publicized as something we citizens should be proud of, but they are also both a waste of taxpayer time and money.
First the more obvious one - middle-of-the-road bicycle lanes. Even though I'm a biker, this has got to be one of the dumbest ideas since new Coke (maybe the best example ever of fixing something that wasn't broken). There is nothing wrong with staying on the right side of the street and sharing the road, or even better, bike lanes along the curb side of the street. But down the middle? One of my favorite bike routes recently added these lanes, as have other parts of Des Moines, and believe me, it does not make biking safer, it makes it more dangerous. Aside from the lack of need, don't forget, taxpayers paid for this lane remarking too! WTF!
Now the less obvious one - new school construction and/or remodeling. I'm all for good physical school facilities, but reading about the summer projects being completed in our suburban school district should make taxpayers cringe. It isn't just the multi-million dollars being spent on over-the-top common rooms and equipment, it's how the district brags about it. "Hey, look at all of this taxpayer money of yours we're spending! It must have been growing on trees because there it was, so we spent it!" I've yet to see any study that directly correlates school building spending with better student-citizens. If the district cares about that, wouldn't they (also wrongly) hire more teachers, or at least keep the ones they have? (Shhhhhh.....don't say anything about school districts here are laying off teachers because the state is running out of money thank you very much worst governor ever Chester Culver.)
When a lot of time and money gets wasted on things that don't do any good, that's a solution in search of a problem. Funny how it usually happens in the governmental, not-for-profit world.
Wednesday, July 28, 2010
Thoughts on RAGBRAI 2010
For the uninitiated, RAGBRAI stands for the Register's Annual Great Bike Ride Across Iowa. It's a weeklong trek of about 10,000 bicyclists, who ride roughly 60-80 miles per day from the western to eastern border of Iowa. (If you need to know more go to ragbrai.com.)
2010 marked the 38th RAGBRAI. I've been on all or parts of 9 or 10 of them, including the third RAGBRAI when I was just short of 11 years old. Owning a 10-speed bike was a big deal then; helmets and biking jerseys were not.
This year I rode from Sioux City to Storm Lake on Sunday (72 miles) and Storm Lake to Algona on Monday (100 miles). (If you followed me on Twitter at @streffbuddy, you'd have received rolling updates!) RAGBRAI has evolved over the years, and mostly in a good way, with a few exceptions. Here are my thoughts from this year's ride:
*The average age of riders keeps going up. The aren't so many in the 20-29 age group anymore, and that used to be the main age not so long ago. RAGBRAI is slightly more family-friendly now, and it's mostly comprised of people in their 30s and 40s, and plenty in their 50s.
*RAGBRAI riders used to be in better shape than they are now. About half of today's riders would be considered overweight, and wearing tight bike shorts doesn't help their appearance. This may be correlated to the average age being higher, but it more directly correlates with Americans' poor diets. Even factoring in what can be burned off during a 450 mile week of bike riding, I'd say many riders have a net weight during RAGBRAI week, plue they generally eat and drink too much and don't exercise enough for the other 51 weeks of the year.
*Speaking of caloric intake, while there is a lot of food and beer consumed during the ride, there really aren't enough food and beverage vendors along the way. I think most communities on the route simply can't get their mind around how much eating and drinking is done by the thousands of riders in a short period of time. Lines have become way too long. In conjunction with this, there aren't enough portable toilets, either. Plenty of tall corn on the roadsides, though.
*The ride and riders are much safer now. I never saw a single rider without a helmet. Law enforcement keeps vehicles off of the route in both directions, and there are ambulances dispersed at short intervals. Still, there were several crashes, some serious. I personlly saw two riders go down crossing some railroad tracks. (They were going slow so they were not seriously injured, other than bruised egos.)
*What once was a given on RAGBRAI - church-run pie stands - has suddenly become obsolete. I saw a total of two places selling pie, in two days, and one of them had run out. It seems like the only sweets being sold on the route now are cookies and bars. I'm used to having one or two pieces of fruit pie every day on the ride. WHAT HAS HAPPENED TO THE PIE ON RAGBRAI?
In summary, RAGBRAI is still a fun and challenging endeavor. Everybody should put it on their bucket list, at least for a day or two.
2010 marked the 38th RAGBRAI. I've been on all or parts of 9 or 10 of them, including the third RAGBRAI when I was just short of 11 years old. Owning a 10-speed bike was a big deal then; helmets and biking jerseys were not.
This year I rode from Sioux City to Storm Lake on Sunday (72 miles) and Storm Lake to Algona on Monday (100 miles). (If you followed me on Twitter at @streffbuddy, you'd have received rolling updates!) RAGBRAI has evolved over the years, and mostly in a good way, with a few exceptions. Here are my thoughts from this year's ride:
*The average age of riders keeps going up. The aren't so many in the 20-29 age group anymore, and that used to be the main age not so long ago. RAGBRAI is slightly more family-friendly now, and it's mostly comprised of people in their 30s and 40s, and plenty in their 50s.
*RAGBRAI riders used to be in better shape than they are now. About half of today's riders would be considered overweight, and wearing tight bike shorts doesn't help their appearance. This may be correlated to the average age being higher, but it more directly correlates with Americans' poor diets. Even factoring in what can be burned off during a 450 mile week of bike riding, I'd say many riders have a net weight during RAGBRAI week, plue they generally eat and drink too much and don't exercise enough for the other 51 weeks of the year.
*Speaking of caloric intake, while there is a lot of food and beer consumed during the ride, there really aren't enough food and beverage vendors along the way. I think most communities on the route simply can't get their mind around how much eating and drinking is done by the thousands of riders in a short period of time. Lines have become way too long. In conjunction with this, there aren't enough portable toilets, either. Plenty of tall corn on the roadsides, though.
*The ride and riders are much safer now. I never saw a single rider without a helmet. Law enforcement keeps vehicles off of the route in both directions, and there are ambulances dispersed at short intervals. Still, there were several crashes, some serious. I personlly saw two riders go down crossing some railroad tracks. (They were going slow so they were not seriously injured, other than bruised egos.)
*What once was a given on RAGBRAI - church-run pie stands - has suddenly become obsolete. I saw a total of two places selling pie, in two days, and one of them had run out. It seems like the only sweets being sold on the route now are cookies and bars. I'm used to having one or two pieces of fruit pie every day on the ride. WHAT HAS HAPPENED TO THE PIE ON RAGBRAI?
In summary, RAGBRAI is still a fun and challenging endeavor. Everybody should put it on their bucket list, at least for a day or two.
Friday, July 23, 2010
Politics And The Tyson Zone
One of my favorite sportswriters/columnists, hands down, is Bill Simmons "The Sports Guy" of ESPN. (P.S. You should follow him on Twitter @sportsguy33.) He writes entertaining, epic length columns full of pop culture references.
Over the years, Simmons has also coined a number of phrases for which he associates and ranks a group of people or things. For example, a recurring Simmons topic is the "13 Levels of Losing" where he defines and ranks the most painful ways for a sports team to lose, like the "Stomach Punch" (a game that ends with an opponent making an improbable and game-winning play).
One of Simmons' other themes is called "The Tyson Zone," and named in honor of boxer Mike Tyson. The Tyson Zone is the status an athlete or other celebrity reaches when his or her behavior becomes so outrageous that one would believe any story or anecdote about the person, no matter how shocking or bizarre.
I've been thinking about how The Tyson Zone applies to so many people now on the political landscape. There might be a waiting list at this point, given all of the strange extremist views coming from Tea Party activists (I'm looking at you, Sarah Palin) and media goofballs (I'm looking at you, everybody on Fox News). And yes, there are plenty of Democrats that belong in it, too.
But there is a special place reserved in The Tyson Zone for Iowa's own Congressman Steve King. Over the years his greatest hits include openly insensitive remarks disparaging minorities, homosexuals, immigrants, Muslims - basically anybody who doesn't look or think like him. Dude has already earned a lifetime membership in The Tyson Zone.
If Steve King is a member of The Tyson Zone, what about all of the people who keep voting to re-relect him? It doesn't say a lot for them. On the other hand, when Mike Tyson went berzerko, it didn't stop poeple from going to his fights, either. Maybe King's constituents have been hypnotized in the same way.
Regardless, I'm convinced if you peeled back Steve King's skin you'd find some primordal creature underneath. He is.....a Martian.....in The Tyson Zone.
Over the years, Simmons has also coined a number of phrases for which he associates and ranks a group of people or things. For example, a recurring Simmons topic is the "13 Levels of Losing" where he defines and ranks the most painful ways for a sports team to lose, like the "Stomach Punch" (a game that ends with an opponent making an improbable and game-winning play).
One of Simmons' other themes is called "The Tyson Zone," and named in honor of boxer Mike Tyson. The Tyson Zone is the status an athlete or other celebrity reaches when his or her behavior becomes so outrageous that one would believe any story or anecdote about the person, no matter how shocking or bizarre.
I've been thinking about how The Tyson Zone applies to so many people now on the political landscape. There might be a waiting list at this point, given all of the strange extremist views coming from Tea Party activists (I'm looking at you, Sarah Palin) and media goofballs (I'm looking at you, everybody on Fox News). And yes, there are plenty of Democrats that belong in it, too.
But there is a special place reserved in The Tyson Zone for Iowa's own Congressman Steve King. Over the years his greatest hits include openly insensitive remarks disparaging minorities, homosexuals, immigrants, Muslims - basically anybody who doesn't look or think like him. Dude has already earned a lifetime membership in The Tyson Zone.
If Steve King is a member of The Tyson Zone, what about all of the people who keep voting to re-relect him? It doesn't say a lot for them. On the other hand, when Mike Tyson went berzerko, it didn't stop poeple from going to his fights, either. Maybe King's constituents have been hypnotized in the same way.
Regardless, I'm convinced if you peeled back Steve King's skin you'd find some primordal creature underneath. He is.....a Martian.....in The Tyson Zone.
Friday, July 16, 2010
No Time For Timing
Most investors who want to move their funds out of the stock market regard their potential action as a temporary move to the sidelines, rather than a permanent decision. Their proposed strategy is to “time the market” and attempt to ride out the storm in the shelter of the harbor, only to set sail again when the weather improves.
The volatility of the past quarter has once again led some down this market timing path, but there are obvious problems with this tactic. Perhaps the main one is, once an investor decides to leave the stock market, exactly when should they return?
Investors may believe it is prudent to wait for economic stabilization as a sign the stock market will recover. However, the market is typically a leading – rather than trailing – economic indicator. So by the time the weather appears clear from the harbor, the tide may have already gone out.
In truth, correctly timing your exit and entry to the stock market is sheer luck. If it were as simple as some claim, millions would be doing it and getting very rich in the process, promoting themselves and their timing strategy.
Consider this: How many so-called investment experts correctly got out of the stock market completely by October 2007 and moved into government bonds, then bought back stocks again in early March 2009, and then reversed course back to cash and bonds again in early 2010?
The short answer is, NONE. Most investors who played the timing game left the stock market between October 2007 and March 2009, and then re-entered later in 2009. They sold low, bought high, and felt miserable in the process.
As I’ve stated many times, no one can predict the future, and no one should attempt to time the stock market. By maintaining a long-term strategic asset allocation (the amount split between stocks/bonds), and practicing disciplined, periodic rebalancing, investment decisions can be based on personal needs and risk appetites, and not on the emotion of the moment.
Uncertainty will always be an integral part of investing (and life). No one has or will come up with a consistently successful strategy for timing the market, and investors would be much better off focusing on things they can control.
The volatility of the past quarter has once again led some down this market timing path, but there are obvious problems with this tactic. Perhaps the main one is, once an investor decides to leave the stock market, exactly when should they return?
Investors may believe it is prudent to wait for economic stabilization as a sign the stock market will recover. However, the market is typically a leading – rather than trailing – economic indicator. So by the time the weather appears clear from the harbor, the tide may have already gone out.
In truth, correctly timing your exit and entry to the stock market is sheer luck. If it were as simple as some claim, millions would be doing it and getting very rich in the process, promoting themselves and their timing strategy.
Consider this: How many so-called investment experts correctly got out of the stock market completely by October 2007 and moved into government bonds, then bought back stocks again in early March 2009, and then reversed course back to cash and bonds again in early 2010?
The short answer is, NONE. Most investors who played the timing game left the stock market between October 2007 and March 2009, and then re-entered later in 2009. They sold low, bought high, and felt miserable in the process.
As I’ve stated many times, no one can predict the future, and no one should attempt to time the stock market. By maintaining a long-term strategic asset allocation (the amount split between stocks/bonds), and practicing disciplined, periodic rebalancing, investment decisions can be based on personal needs and risk appetites, and not on the emotion of the moment.
Uncertainty will always be an integral part of investing (and life). No one has or will come up with a consistently successful strategy for timing the market, and investors would be much better off focusing on things they can control.
Tuesday, July 13, 2010
Best Song Lyrics (Part II)
How about this from Dave Matthews Band in their song, Grey Street, about how some people aren't willing or able to break free from the drudgery of their lives.
There's a stranger speaks outside her door
Says take what you can from your dreams
Make them as real as anything
It'd take the work out of courage
But she says "Please
There's a crazy man that's creeping outside my door,
I live on the corner of Grey Street
And the end of the world. "
There's an emptiness inside her
And she'll do anyrthing to fill it in
And though it's red blood bleeding from her now
It's more like cold blue ice in her heart
She feels like kicking out all the windows
And setting fire to this life
She could change everything about her
Using colors bold and bright
But all the colors mix together - to grey
And it breaks her heart
There's a stranger speaks outside her door
Says take what you can from your dreams
Make them as real as anything
It'd take the work out of courage
But she says "Please
There's a crazy man that's creeping outside my door,
I live on the corner of Grey Street
And the end of the world. "
There's an emptiness inside her
And she'll do anyrthing to fill it in
And though it's red blood bleeding from her now
It's more like cold blue ice in her heart
She feels like kicking out all the windows
And setting fire to this life
She could change everything about her
Using colors bold and bright
But all the colors mix together - to grey
And it breaks her heart
Subscribe to:
Posts (Atom)