Most people have received a wide variety of financial advice over the years.  There is a particular brand of advice, supposedly dispensed by a semi-fictitious secondary parental character that has become particularly widespread.  This
philosophy contains many key points, some of which have validity and merit.
However, one of the key things that all investors need to consider whether the advice they are receiving is a fact, or a fallacy.  The unfortunate truth is that much of the advice being presented by popular authors and speakers as financial facts are actually financial …

Recent financial news has been dominated by the initial public offering of Facebook.  Morgan Stanley underwrote the initial offering last week of 400 million shares at an initial price of $38 per share.  This served as one of the most publicized IPO’s in the history of the stock market.  At $38 per share, this created an implicit market capitalization of $104B for Facebook.
This level of valuation is approximately 107 times earnings.  For comparison, Apple’s P/E is approximately 13, and the S&P 500 index is valued at roughly 15 times earnings.  …

In the midst of the constant headlines concerning government ‘bailout’ initiatives that have resulted from a credit crisis in the financial sector, one must stop to wonder whether the government is acting responsibly and what the likely results of these actions will be. (In truth, one doesn’t have to wonder that much … the government is acting with an almost complete lack of anything resembling financial responsibility.)
The core driver of this problem is that public agencies making market decisions will tend to make them based on political expediency instead of …

An article was recently published by Reuters entitled: “The New American Dream is Renting to Get Rich.” The thesis of this article is that home ownership is not the fast-track to wealth that it used to be.  It also makes the point that many people would be better off renting and investing their surplus income in wealth-building investments than by sinking all of their income into owning a home.  The article also went on to explain how many people who had purchased homes during the boom lacked the financial resources …

In the game of blackjack, you can ‘double down’ on a hand by doubling your bet for one more card from the dealer.  (When playing blackjack, your goal is to create a hand that is as close as possible to 21 without going over)A  This action allows you to take additional risk for an immediate payoff.  Within the community of people who enjoy the game of blackjack, most will tell you that it is advantageous to double down on an eleven, or possibly a ten.  The principal reason for this …

One of the ideas that has become quite pervasive within the minds of investors is the notion of a “good stock” or a “good property” to own. A This notion stems from a general desire on the part of most people to own things of quality. A In our personal life, this frequently manifests itself as a desire to own a comfortable home, and a reliable automobile. A Quality gives us a feeling of safety and security. A Thus, it seems completely natural to want our investments to be the stock of a high …

In a press release from the Federal Open Market Committee released on September 21 indicates that by June of 2012, the Federal Reserve is going to simultaneously sell $400B worth of shorter-term securities and purchase $400B of longer-term securities.  Some refer to this decision as “operation twist.” The expected effect of this maneuver will be to place downward pressure on longer-term interest rates.  The Federal Reserve is expecting that the average maturity of bonds in their portfolio will rise from 75 months currently to approximately 100 months by the …

The recent rise of gold prices and volatility within the economy has begun to challenge the notion of wealth, productivity, and output that many people hold in their minds.  The typical situation for most people, is that they think of wealth as being measured in money.  For people like Ben Bernanke, money means currency.  For people like Bill Bonner, money means gold.  However, in both cases, wealth is something much deeper.
Wealth as Money
It is not surprising that most people view wealth and money as being the same thing.  After all, …

The cliché ‘buy low and sell high’ has been around seemingly since the beginning of time.  However, there is quite a bit of depth behind this simple piece of wisdom.  In order to discover this depth, we need to ask ourselves what kind of person buys low and what kind of person sells high.  We also need to ask what situations result in low prices, and what situations result in high prices.
Buying Low
Let’s start with buying low.  Simple logic dictates that if prices are low, then there is an excess …

One of the trends that many people experience in the world of investing is a noted tendency to become ‘gun shy’ when they experience volatility in their investments.  The reason for this is because our psychological makeup is much more afraid of loss than joyful over gains.  This leads many people to either become irrationally risk averse, or to take risks that they are not aware of in a desire to achieve safety.  The problem this creates is that fear of loss can make people blind to the opportunity for …