Recent gyrations in the financial markets resulting from the recent downgrade of US government credit by Standard and Poors has been a roller coaster ride for investors.  Persistent decreases followed by a sharp increase, then a decrease, and another increase has investors wondering what to expect next.  The financial markets have become a roller coaster of volatility.  And this roller coaster is not only constrained to stocks.  The debt downgrade created a paradoxical result of stoking new fears for widespread default in the euro-zone, and actually channeled more capital toward …

In the book “Rich Dad, Poor Dad” Robert Kiyosaki outlines the profile of two different types of investor.  The first type of investor (Type I) is primarily interested in packaged investments like mutual funds, bonds, and CD’s.  These investors are generally looking for a passive strategy that allows them to generate modest compounded returns with minimal active management.  Being a Type I investor requires consistent budget discipline to continually save a sufficient amount of funds for contribution to their investment plan.
The second type of investor (Type II) is a ‘deal …

Most people are familiar with stories of buccaneers or pirates who sailed the seas of the Caribbean and plundered ships for treasure.  The real story behind the buccaneer is somewhat less romantic and considerably more instructive.
The word buccaneer is derived from the French “boucanier”, which roughly translates as “someone who smokes meat” and which in turn comes from the native American “bukan”.  During the early seventeenth century, a large number of exiled French, Dutch, and English people in the Carribean would hunt wild animals on the islands and smoke the …

Most people who have spent any amount of time around college towns or night clubs are familiar with the phrase “beer goggles.”A  Simply put, this phrase refers to a general tendency for people who have been drinking alcohol excessively to develop highly distorted perceptions of other people’s attractiveness.  In these situations, many people find themselves making romantic advances toward people whom they would not be interested in if they were sober.
Fortunately, most people mature with age and grow out of the propensity to don “Beer Goggles” when finding their spouse.  …

Many stock market investors have become familiar with the work of Harry Markowitz in creating a methodology known as “Portfolio Theory” for managing equity investments.  The fundamental premise of portfolio theory is to maximize the rate of return for a given level of volatility (risk) by diversifying with multiple financial instruments that are not perfectly correlated in the way that their prices move.
Traditionally, portfolio theory bases all of its calculations on the ‘risk-free’ rate of return, typically assumed to be the rate of return from government bonds.  By constructing a …